EMPLOYMENT AGREEMENT
FOR
XXXXX X. XXXXXXXXX
TABLE OF CONTENTS
PAGE
1. EMPLOYMENT. 2
2. SERVICES. 2
3. COMPENSATION AND BENEFITS. 3
4. TERMINATION OF EMPLOYMENT / CHANGE IN CONTROL. 7
5. CONFIDENTIAL INFORMATION / RETURN OF DOCUMENTS /
NONCOMPETE REMEDIES. 15
6. SUCCESSORS AND ASSIGNS. 18
7. TIMING OF AND NO DUPLICATION OF PAYMENTS. 19
8. MODIFICATION OR WAIVER. 19
9. NOTICES. 20
10. GOVERNING LAW AND RESOLUTION OF DISPUTES. 20
11. SEVERABILITY. 21
12. COUNTERPARTS. 21
13. HEADINGS. 21
14. ENTIRE AGREEMENT. 21
15. SURVIVAL OF AGREEMENTS. 22
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
and is effective as of December 31, 1997 by and between Xxxxx X. Xxxxxxxxx, an
individual residing at 00 Xxxxx Xxxx, Xxxxxxx, Xxx Xxxx 00000 ("Executive"), and
Philips International Realty Corp., a Maryland corporation with offices at c/o
Philips International, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("New Reit").
RECITALS
WHEREAS, as set forth in the Contribution and Exchange Agreement by and
between the Property Partnerships (as defined therein), National Properties
Investment Trust, a Massachusetts business trust ("National"), Philips
International Realty, L.P., a Delaware limited partnership ("PRLP") and New Reit
dated August 11, 1997, the Property Partnerships, National and PRLP determined
that it was in the best interests of the parties' long term strategic growth to
combine their respective properties and related assets;
WHEREAS, in order to effectuate this combination, the Property
Partnerships and National agreed to contribute certain properties and other
assets located throughout the States of New York, New Jersey, Connecticut,
Massachusetts and Florida and owned or controlled by the Property Partnerships
or National (the "Property") to New Reit and New Reit agreed to contribute such
Property to PRLP in exchange for a general partnership interest therein, all as
of the closing (the "Closing");
WHEREAS, the Closing occurred and New Reit began operations in December
1997; and
WHEREAS, New Reit desires to employ Executive, and Executive desires
to be employed by New Reit, pursuant to the terms set forth herein
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. Employment.
New Reit hereby agrees to employ Executive, and Executive
hereby agrees to be employed by New Reit, on a full-time basis for a term
commencing on the date hereof and expiring on December 31, 2000, unless this
Agreement shall be terminated earlier pursuant to the terms hereof, provided,
however, that commencing on December 31, 2000 and each December 31st thereafter,
the term of this Agreement shall be extended automatically for one (1)
additional year unless at least one hundred eighty (180) days prior to the
applicable expiration date either New Reit or Executive shall have given written
notice to the other party that such party does not wish to extend this Agreement
("Notice of Non-Extension"). The term of this Agreement during which Executive
shall be employed on a full-time basis is referred to herein as the "Employment
Period."
2. Services.
(a) Executive shall serve as Chief Financial Officer and
Director of Acquisitions of New Reit. Executive shall devote his best efforts
and substantially all of his business time, skill and attention to the business
of New Reit, and shall perform
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such duties as are customarily performed by such executive officers and as may
be more specifically enumerated from time to time by the Board of Directors of
New Reit (the "Board"), the Executive Committee of the Board, if any, the Chief
Executive Officer, President or Chief Operating Officer of New Reit. The
Executive's position and duties may be changed by the Chief Executive Officer,
President, or Chief Operating Officer of New Reit, provided, however, that he
shall retain an appropriate title, position and function as an Executive
Officer of New Reit.
It is understood that the foregoing is not intended to
preclude Executive from (i) owning and managing personal investments, including
real estate investments, subject to the restrictions set forth in Paragraph
5(e) hereof or (ii) engaging in charitable activities and community affairs,
provided that the performance of these activities referred to in clauses (i)
and (ii) does not prevent Executive from devoting substantially all of his
business time to New Reit.
(b) Executive shall be nominated for the Board of Directors
of New Reit at the first regularly scheduled annual shareholders meeting
following the initial sale for cash to the public of New Reit common stock, par
value $.01 per share ("Common Stock" or "New Reit Common Stock"). Such initial
sale of New Reit Common Stock is hereinafter referred to as the initial public
offering (the "IPO").
(c) Executive shall be based in New York, New York,
subject to reasonable travel requirements.
3. Compensation and Benefits.
During the Employment Period, New Reit shall pay Executive a
minimum annual base salary in the amount of $150,000 ("Annual Base Salary")
which may be
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increased but not decreased from time to time and shall be payable
in accordance with New Reit's normal payroll practices. In addition, Executive
shall receive a minimum of ten (10%) percent of any annual bonus pool. In
addition, Executive shall be offered participation in any stock-based
compensation or other incentive compensation plans or programs made generally
available to executives of New Reit. It is understood that any such annual bonus
pool or incentive programs will be determined by the Board each year in its sole
discretion.
New Reit shall deduct and withhold from compensation payments
all social security and other federal, state and local taxes and charges in the
minimum amounts (or such greater amounts as Executive may from time to time
request) which currently are or which hereafter may be required by law to be so
deducted and withheld, including withholding pursuant to bonus withholding
rates, as applicable. In addition to the compensation specified above, Executive
shall be entitled to the following benefits:
(a) health and hospitalization (family), life insurance,
disability, business travel accident, paid vacation
and any other compensated absences and any other
plans made generally available to other executive
officers of New Reit;
(b) a $400 monthly allowance which is intended to cover
local business-related travel expenses; and
(c) reimbursement for substantiated reasonable business
expenses including out-of-town travel expenses
incurred by Executive in furtherance of the interests
of New Reit.
In addition, the Board, in its sole discretion, may grant Executive restricted
share awards and options to purchase shares of Common Stock, in addition to the
Options discussed hereinafter.
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As further consideration for Executive agreeing to serve as an
Executive Officer of New Reit and entering into this Agreement upon the terms
set forth herein, including, without limitation, the terms relating to
non-competition set forth in Paragraph 5(e) below, New Reit shall:
(d) on January 1, 1998, issue to Executive options to
purchase 10,000 shares of Common Stock pursuant to
the New Reit 1997 Stock Option and Long-Term
Incentive Plan (the "Plan"), which Plan was adopted
by New Reit and approved by shareholders concurrent
with the Closing), at an exercise price equal to $50
per share of Common Stock which is the price of New
Reit Common Stock at the Closing (the "Options")
provided, however, that after taking into account
the Options and any dilution which may occur as a
result of the IPO with respect to the underlying
shares of New Reit Common Stock, upon the
consummation of the IPO, Executive shall have an
option to purchase 25,000 shares of New Reit Common
Stock at an exercise price equal to the price to the
public for shares of New Reit Common Stock sold in
the IPO. Executive's Options shall be evidenced by
an option grant agreement dated as of January 1,
1998 which agreement shall include, but not be
limited to, the following provisions: vesting,
subject to Executives continued employment with New
Reit and the provisions of Paragraphs 4(a), 4(b) and
4(c) below, over a three (3) year period with
one-third (1/3) of the Options vesting on each of
December 31, 1998, December 31, 1999, and the
balance vesting on December 31, 2000 (unless vesting
is otherwise accelerated pursuant to the terms and
conditions of this Agreement or the option grant
agreement); non-transferability and anti-dilution
provisions; and, provisions relating to the use of
the Options together with the underlying stock to
collateralize any funds necessary for exercise; and
(e) concurrently with the IPO or as soon as practicable
thereafter, loan on a non-recourse basis to
Executive $50,000 (the "Stock Acquisition Loan"),
with the loan proceeds to be used by Executive
simultaneously to purchase as many newly issued
shares of New Reit Common Stock, at the price to the
public for shares of New Reit Common Stock sold in
the IPO, as such Stock Acquisition Loan amount will
permit. Interest shall accrue on the Stock
Acquisition Loan at six (6%) percent per annum and
shall be payable, on the outstanding balance thereof
from time to time, quarterly in arrears. Dividends
on the New Reit Common Stock acquired by Executive,
subject to reduction for interest repayment
(interest payments shall first be made by the
withholding of
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dividends), shall be payable to Executive at such
times and in such amounts as may generally be
declared by the Board with respect to all shares of
New Reit Common Stock then outstanding without
regard to whether the Stock Acquisition Loan has
been repaid or forgiven. The Stock Acquisition Loan
is being granted and secured pursuant to the terms
and conditions of this Agreement, with the New Reit
Common Stock purchased with the proceeds of the
Stock Acquisition Loan and a Secured Non-Recourse
Promissory Note and Stock Pledge Agreement
evidencing and securing such Stock Acquisition Loan
as executed between New Reit and Executive. In the
event of a conflict between the aforementioned
documents and this Agreement, the terms of this
Agreement shall control.
It is the intention of the parties that the dividends
received by Executive on the New Reit Common Stock
purchased with the proceeds of the Stock Acquisition
Loan will equal or exceed the interest payable
thereon. Accordingly, New Reit hereby agrees to
timely pay Executive such additional cash
compensation as may be necessary for Executive to
maintain cash neutrality, giving appropriate
consideration to the taxability of any such
additional cash compensation, should the timing
and/or amount of dividends received by the Executive
be insufficient to fund interest payable on the Stock
Acquisition Loan.
The Stock Acquisition Loan shall be forgiven as
follows: subject to the provisions of Paragraphs
4(a), 4(b) and 4(c) below, $16,666 of the principal
shall be forgiven on January 1, 1999, (ii) $16,666 of
the principal shall be forgiven on January 1, 2000,
and (iii) the balance of the principal shall be
forgiven on December 31, 2000 provided Executive is
employed by New Reit on the day immediately preceding
each applicable forgiveness date.
The Stock Acquisition Loan shall be initially secured
by the shares of New Reit Common Stock purchased by
Executive from New Reit with the proceeds of the
Stock Acquisition Loan. On January 1, 1999, and
January 1, 2000, the outstanding balance of the Stock
Acquisition Loan shall be secured only by shares of
New Reit Common Stock having a Fair Market Value of
one hundred twenty-five (125%) percent of the
outstanding principal amount of the Stock Acquisition
Loan. On each of January 1, 1999 and January 1, 2000
( the "Determination Date"), New Reit shall
reasonably determine the aggregate Fair Market Value
of the collateral (the "Collateral Value") being
held. If on either Determination Date the Collateral
Value exceeds one hundred twenty-five (125%) percent
of the outstanding balance of the Stock Acquisition
Loan on such Determination Date after giving effect
to any loan forgiveness, as applicable (the "Secured
Loan Amount "), New Reit shall
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automatically release to Executive such portion of
the collateral the aggregate Fair Market Value of
which equals the Collateral Value less the Secured
Loan Amount, free and clear of any and all
encumbrances under the Stock Pledge Agreement.
Executive shall be required to execute the
aforementioned Stock Pledge Agreement and Secured
Non-Recourse Promissory Note. New Reit shall then
issue shares of New Reit Common Stock to Executive
in exchange for the Stock Acquisition Loan. New Reit
shall, upon receipt from Executive of the Stock
Pledge Agreement and Secured Non-Recourse Promissory
Note for New Reit Common Stock purchased with the
proceeds of the Stock Acquisition Loan, make prompt
delivery of the certificates evidencing ownership of
the shares of New Reit Common Stock to Executive,
subject to any requirements set forth in the Stock
Pledge Agreement; provided, however, that if any law
or regulation requires New Reit to take any action
with respect to such shares prior to the delivery
thereof, then the date of the delivery of the shares
shall be extended for the period necessary to
complete such action. As soon as practicable
following such time as New Reit is eligible to use
Form S-3 (or any successor form thereof) to register
such shares of New Reit Common Stock, New Reit shall
use its reasonable best efforts to register the
resale of such shares through a shelf registration
statement under the Securities Act of 1933, as
amended (the "Act"). The Company agrees that if at
any time after the IPO and prior to such
registration, the Company authorizes the filing of a
registration statement under the Act in connection
with the proposed offer of any of its securities by
the Company or any of its shareholders ("Subsequent
Registration Statement"), New Reit shall use its
reasonable best efforts to register the shares of
New Reit Common Stock purchased by Executive with
the proceeds of the Stock Acquisition Loan via the
Subsequent Registration Statement. Certificates for
shares of New Reit Common Stock, when released to
Executive, shall have restrictive legends applicable
to the Stock Pledge Agreement and any statements of
other applicable restrictions with respect thereto
removed.
4. Termination of Employment / Change in Control.
(a) Subject to the provisions of Paragraphs 4(b), 4(c) and
4(e) below as applicable, in the event New Reit terminates Executive's
employment during the Employment Period, (i) New Reit shall pay Executive any
unpaid salary accrued through and including the date of termination plus any
unpaid bonus pool amount due Executive for any prior year (the
"Accrued Amount"); (ii) New Reit
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shall pay an additional ten (10) month's base salary payable over the
immediately following ten (10) month period in accordance with the Company's
normal payroll practices plus (subject to the terms and conditions of this
Agreement) continued life, medical, dental and disability coverage for such ten
(10) month period which shall be identical to the coverage provided to active
employees during such period ("Applicable Severance"); (iii) the remaining
balance due under the Stock Acquisition Loan on date of termination of
Executive's employment pursuant to this Paragraph shall be forgiven as of the
date of Executive's termination and any remaining shares of New Reit Common
Stock held as collateral for the Stock Acquisition Loan shall be released to
Executive as soon as practicable after Executive's date of termination ("Stock
Acquisition Loan Forgiveness and Collateral Release"); (iv) Executive shall be
entitled to exercise any options, including the Options granted hereunder,
which have vested and are exercisable in accordance with the terms of this
Agreement, the applicable stock option agreement or the Plan within one year of
the date of Executive's termination of employment. Executive understands that
the effect of exercising any incentive stock options on a day that is more than
ninety (90) days after the date of termination of employment will be to cause
such incentive stock options to be treated as non-qualified stock options; (v)
Executive shall be entitled to retain any shares awarded to Executive which are
fully vested on the date of termination ("Vested Share Award"); (vi)
Executive shall be entitled to accelerated vesting in that portion of
Executive's Options, and any other options which have been granted to him which
are scheduled to vest on or by the December 31st immediately succeeding the
date of Executive's termination of employment which shall vest on the date of
such termination ("Accelerated Vesting"); and (vii) Executive shall be entitled
to a pro rata portion, based on the number of days in the period beginning
with January 1 of the calendar year in which such termination occurred and
ending with the date the Employment Period ends, of the average annual amount
of bonus pool payments paid to Executive each year of Executive's employment
hereunder (the "Pro Rata Bonus Payment"). Except for any rights which Executive
may have to the
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Accrued Amount, Applicable Severance, Stock Acquisition Loan Forgiveness and
Collateral Release, Accelerated Vesting, Pro Rata Bonus Payment and Vested
Share Awards or as otherwise required by law, New Reit shall have no, further
obligations hereunder following such termination.
(b) In the event of termination of Executive's employment as
a result of either Executive's death or Disability (as hereinafter defined)
during the Employment Period, New Reit shall pay or provide to Executive or his
heirs or estate as applicable (A) the Accrued Amount, (B) Applicable Severance
(provided, however, that in the event of death, life and disability coverage
shall cease) (C) a pro-rata portion, based upon the number of days in the
period beginning with January 1 of the calendar year in which such termination
occurred and ending with the date the Employment Period ends (without extension
or further extension as applicable, and assuming such termination did not
occur) of the average annual amount of bonus pool payments paid to Executive
during each year of Executive's employment hereunder and (D) immediate Stock
Acquisition Loan Forgiveness and Collateral Release. In the event the
Executive's employment terminates for one of the reasons set forth in the first
sentence of this Paragraph 4(b) in the first year of employment, Executive
shall receive in respect of item (C) in the preceding sentence the full amount
of the annual bonus that would have otherwise been payable to Executive for
such year had his employment not terminated. The amounts due under this clause
4(b) shall be payable, at the option of Executive, his estate or his personal
representative, either (i) in full immediately upon such termination without
discount for early payment or (ii) monthly, in equal installments over the ten
(10) month period immediately following his termination of employment. In
addition, Executive shall have a fully-vested non-forfeitable right to the
Options and any
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other options or restricted stock awards previously granted to him. Executive
shall be entitled, at the option of Executive, his estate or his personal
representative, within one (1) year in the case of termination as a result of
Executive's death or Disability of the date of such termination, (i) to
exercise any options to purchase shares of Common Stock that have vested
(including, without limitation, by acceleration in accordance with the terms of
this Agreement) ("Option Exercise Period") and are exercisable in accordance
with the terms of either this Agreement, any stock option agreement or the
Plan, (ii) to retain any shares of Common Stock awarded to Executive which are
vested on the date of termination, and (iii) to require New Reit (upon written
notice delivered within one year hundred eighty (180) days following the date
of Executive's termination) to repurchase all or any portion of Executive's
vested options (including without limitation options, if any, which have vested
by acceleration in accordance with the terms of this Agreement, the Plan or
stock option agreement) to purchase shares of Common Stock at a price equal to
the difference between the Fair Market Value (as hereinafter defined) of the
shares of Common Stock for which the options to be repurchased are exercisable
and the exercise price of such option as of the date of such notice.
(c) (i) In the event of a Change in Control during the
Employment Period (as hereinafter defined) Executive shall be entitled to
vesting in all options and restricted stock awards and in the event of
termination of Executive's employment in connection with such Change in Control,
New Reit shall pay Executive and Executive shall be entitled to all the payments
and rights Executive would have had if Executive's employment had been
terminated on the date of the Change in Control due to Disability as set forth
in Paragraph 4(b) (including the Accrued Amount, Applicable Severance,
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Stock Acquisition Loan Forgiveness and Collateral Release, the Pro Rata Bonus
Payment and all benefits under this Agreement) except that Executive must
exercise any options which have vested pursuant to this Section 4(c) within one
year of his actual termination of employment. For purposes of this Agreement,
Executive's employment will be deemed to have terminated in connection with a
Change in Control if either (i) he voluntarily terminates employment within the
ninety (90) day period immediately following such Change in Control (if his
voluntary termination occurs within such ninety (90) day period, the provisions
of this Paragraph 4(c) and not Paragraph 4(e) shall be applicable), or (ii) his
employment is involuntarily terminated by New Reit or its successor, for any
reason within the one (1) year period immediately following such Change in
Control. Furthermore, all cash payments owed to Executive pursuant to this
Paragraph shall be paid to Executive in a single sum without discount for early
payment.
(ii) If the Change in Control is a change "in the ownership or effective
control" of New Reit or "in the ownership of a substantial portion of the
assets" of New Reit within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, (the "Code") and the Executive is then, in any
taxable year, liable for the payment of an excise tax under Section 4999 of the
Code (or any successor provisions), with respect to any payment in the nature
of compensation made by New Reit to (or for the benefit of) Executive, New Reit
shall pay Executive an amount equal to X determined under the following
formula:
X = E x P
--------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
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E = the rate at which the excise tax is assessed
under Section 4999 of the Code
P = the amount with respect to which such
excise tax is assessed, determined without
regard to this Section 4(c)(ii)
FI = the highest effective marginal rate of
income tax applicable to Executive under the
Code for the taxable year in question (taking
into account any phase-out or loss of
deductions, personal exemptions and other
similar adjustments);
SLI = the sum of the highest marginal rates of
income tax applicable to Executive under all
applicable state and local laws for the
taxable year in question (taking into account
any phase-out or loss of deductions, personal
exemptions and other similar adjustments);
and
M = the highest marginal rate of Medicare Tax
applicable to Executive under the Code for
the taxable year in question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 4(c)(ii) shall be made of the earlier of
the date New Reit is required to withhold such tax, or the date the tax is
required to be paid by Executive. It is the intention of the parties that New
Reit provide Executive with a full tax gross-up under the provisions of this
Paragraph, so that on a net after-tax basis, the result to Executive shall be
the same as if the excise tax under Section 4999 of the Code (or any successor
provisions) had not been imposed. The Excise Tax Gross Up shall be adjusted to
achieve a full gross-up if alternative minimum tax rules are applicable to
Executive.
(d) For purposes of this Agreement:
(i) "Disability" shall mean the determination by
New Reit, upon the advice of an independent
qualified physician,
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reasonably acceptable to Executive, that
Executive has become physically or
mentally incapable of performing his
duties under this Agreement and such
disability has disabled Executive for a
cumulative period of one hundred eighty
(180) days within a twelve (12) month
period.
(ii) "Fair Market Value" shall mean the average
of the closing price on the New York Stock
Exchange of the Common Stock on each of the
trading days within the thirty (30) days
immediately preceding the date of
termination of Executive's employment;
(iii) "Change in Control" shall mean, exclusive
of the IPO, that any of the following
events has occurred: (a) any "person" or
"group" of persons, as such terms are used
in Sections 13 and 14 of the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), other than any employee
benefit plan sponsored by New Reit,
becomes the "beneficial owner", as such
term is used in Section 13 of the Exchange
Act, of thirty (30%) percent or more of
either (i) the Common Stock or (ii) the
units of limited partnership interests in
PRLP ("Units") issued and outstanding
immediately prior to such acquisition; (b)
any Common Stock is purchased pursuant to
a tender or exchange offer other than an
offer by New Reit; (c) the dissolution or
liquidation of New Reit or the
consummation of any merger or
consolidation of New Reit or any sale or
other disposition of all or substantially
all of its assets, if the shareholders of
New Reit immediately before such
transaction own, immediately after
consummation of such transaction, equity
securities (other than options and other
rights to acquire equity securities)
possessing less than thirty (30%) percent
of the voting power of the surviving or
acquiring company; or (d) both Xxxxxx
Xxxxxxxx and Xxxxxx Xxxxxx are no longer
executive officers or members of the Board
of Directors of the Company.
(e) In the event Executive elects to terminate his employment
at any time during the Employment Period with New Reit, (other than following a
Notice of Non-Extension) Executive shall be entitled to payment of the Accrued
Amount. In addition, in the event (i) Executive is no longer serving as the
Chief Financial Officer or Director of Acquisitions of New Reit or (ii) the
Company has materially breached any provision of this Agreement and such breach
has not been cured within 10 days following notice thereof by the Executive to
the Company, and if he terminates his employment,
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he shall be entitled to (i) payment of six (6) months' base salary payable
commencing with the date of his termination of employment plus continued life,
medical, dental and disability coverage for such period (the "Special Severance
Payment"); (ii) Accelerated Vesting; (iii) the Pro Rata Bonus Payment and (iv)
immediate Stock Acquisition Loan Forgiveness and Collateral Release. In
addition, Executive shall be entitled (i) to exercise any options, including the
Options granted hereunder, which have vested and are exercisable in accordance
with the terms of this Agreement within one year of the date of his termination
of employment, and (ii) to retain any shares awarded to Executive which are
fully vested on the date of termination. Except for any rights which Executive
may have to the Accrued Amount, the Special Severance Payment, the Pro Rata
Bonus Payment and the Stock Acquisition Loan Forgiveness and Collateral Release,
if applicable, vested options and vested share awards or as otherwise required
by law, New Reit shall have no further obligations hereunder following such
termination.
(f) In the event Executive terminates his employment with New
Reit following New Reit's issuance of a Notice of Non-Extension to Executive,
but prior to expiration of the one hundred eighty (180) day notice period,
Executive shall be entitled to the Accrued Amount, vesting in all options and
restricted stock awards, the Pro Rata Bonus Payment and Stock Acquisition Loan
Forgiveness and Collateral Release. Except for any rights which Executive may
have to the Accrued Amount, the Stock Acquisition Loan Forgiveness and
Collateral Release, and a fully vested non-forfeitable right to all options and
restricted stock awards previously granted to him, New Reit shall have no
further obligation hereunder following such termination.
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(g) Any termination of Executive's employment by New Reit or
any such termination by Executive (other than on account of death) shall be
communicated by written Notice of Termination to the other party hereto.
(h) Executive shall not be required to mitigate amounts
payable under this Agreement by seeking other employment or otherwise, and there
shall be no offset against cash amounts due Executive under this Agreement on
account of subsequent employment. In the event Executive obtains subsequent
employment and the Executive's new employer maintains a medical plan, dental
plan, life insurance and disability insurance plans, New Reit shall no longer
provide continued medical, dental, life and disability coverage for Executive at
New Reit's cost as of the date Executive first becomes eligible to participate
in his new employer's plans.
5. Confidential Information / Return of Documents / Noncompete /
Remedies.
(a) Executive understands and acknowledges that during his
employment with New Reit, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
New Reit. Executive shall hold in a fiduciary capacity for the benefit of New
Reit such Confidential Information obtained by Executive during his employment
with New Reit and shall not, directly or indirectly, at any time, either during
or after his employment with New Reit, without New Reit's prior written consent,
use any of such Confidential Information or disclose any of such Confidential
Information to any individual or entity other than New Reit or its employees,
except as required in the performance of his duties for New Reit or as otherwise
required by law. Executive shall take all reasonable steps to safeguard
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such Confidential Information and to protect such Confidential Information
against disclosure, misuse, loss or theft.
(b) The term "Confidential Information" shall mean any
information not generally known in the relevant trade or industry or otherwise
not generally available to the public, which was obtained by Executive from New
Reit, the Partnership Properties, National or PRLP. For purposes of this
Paragraph 5, New Reit shall be deemed to include any entity which is controlled,
directly or indirectly, by New Reit and any entity of which a majority of the
economic interest is owned, directly or indirectly, by New Reit.
(c) The Executives agrees that for a period of two (2) years
following his termination of employment with New Reit, the Executive will not
directly or indirectly, solicit, recruit, hire or cause to be hired for
employment, any individual or individuals who are employed by New Reit or its
subsidiaries/affiliates on or after his date of termination. The foregoing shall
not prohibit the Executive from giving an unsolicited reference upon request.
(d) Except for such items which are of a personal nature to
Executive (e.g., daily business planner and roll-o-dex), all writings, records,
and other documents and things containing any Confidential Information shall be
the exclusive property of New Reit, shall not be copied, summarized, extracted
from, or removed from the premises of New Reit, except in pursuit of the
business of New Reit or at the direction of New Reit, and shall be delivered to
New Reit, without retaining any copies, upon the termination of Executive's
employment or at any time as requested by New Reit.
(e) Executive agrees that:
(A) During the Employment Period, Executive shall
not, directly or indirectly, within the States of New York, New Jersey,
Connecticut, Massachusetts or Florida engage in, or own, invest in, manage,
control, derive any compensation, or
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provide consulting services either directly or indirectly with respect to any
venture or enterprise engaged in any development, acquisition or management
activities with respect to retail shopping center properties, without regard to
whether or not such activities compete with New Reit. Nothing herein shall
prohibit Executive from being a passive owner of not more than one (1%) percent
of the outstanding stock of any class of securities of a corporation or other
entity engaged in such business which is publicly traded, so long as he has no
active participation in the business of such corporation or other entity.
(B) If, at the time of enforcement of this Paragraph
5(e), a court shall hold that the duration, scope, area or other restrictions
placed on Executive herein are unreasonable, the parties agree that without
further action on their parts reasonable maximum duration, scope, area or other
restrictions shall be substituted by such court for the stated duration, scope,
area or other restrictions.
(C) For purposes of this Paragraph 5(e), New Reit
shall be deemed to include any entity which is controlled, directly or
indirectly, by New Reit and any entity of which a majority of the economic
interest is owned, directly or indirectly, by New Reit.
(f) The parties hereto agree that New Reit would suffer
irreparable harm from a breach by Executive of any of the covenants or
agreements contained in Paragraph 5 of this Agreement. Therefore, in the event
of the actual or threatened breach by Executive of any of the provisions of
Paragraph 5 of this Agreement, New Reit may, in addition and supplementary to
other rights and remedies existing in its favor, apply to any court of law or
equity of competent jurisdiction for specific
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performance and/or injunctive or other relief in order to enforce or prevent
any violation of the provisions thereof.
6. Successors and Assigns.
(a) New Reit shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of New Reit, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that New Reit
would be required to perform it if no such succession had taken place. Failure
of New Reit to obtain such agreement prior to the effectiveness of a succession
shall be a breach of this Agreement and shall entitle Executive to compensation
from New Reit and such successor in the same amount and on the same terms as he
would be entitled to pursuant to Paragraph 4(c) above. Except that for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the date of termination. In the event of such a breach
of this Agreement, the Notice of Termination shall specify such date as the date
of termination. As used in this Paragraph, "New Reit" shall mean New Reit as
hereinbefore defined and any successor to all or substantially all of its
business and/or its assets as aforesaid which executes and delivers the
agreement provided for in this Paragraph 6 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law. Any cash
payments owed to Executive pursuant to this Paragraph 6 shall be paid to
Executive in a single sum immediately prior to the consummation of the
transaction with such successor.
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(b) This Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other designee or, if there be no
such designee, to Executive's estate.
7. Timing of and No Duplication of Payments.
All payments payable to Executive pursuant to this Agreement
shall be paid as soon as practicable after such amounts have become fully vested
and determinable. In the event any amount becomes vested or payable under more
than one provision of this Agreement, Executive shall not be entitled to receive
a duplicate payment of any such amount.
8. Modification or Waiver.
No amendment, modification, waiver, termination or
cancellation of this Agreement shall be binding or effective for any purpose
unless it is made in a writing signed by the party against whom enforcement of
such amendment, modification, waiver, termination or cancellation is sought. No
course of dealing between or among the parties to this Agreement shall be deemed
to affect or to modify, amend or discharge any provision or term of this
Agreement. No delay on the part of New Reit or Executive in the exercise of any
of their respective rights or remedies shall operate as a waiver thereof, and no
single or partial exercise by New Reit or Executive of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right or
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remedy on any one occasion shall not be construed as a bar to or waiver of any
such right or remedy on any other occasion.
9. Notices.
All notices or other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly given
if delivered by hand or delivered by a recognized delivery service or mailed,
postage prepaid, by express, certified or registered mail, return receipt
requested, and addressed to New Reit or Executive, as applicable, at the address
set forth above (or to such other address as shall have been previously provided
in accordance with this Paragraph 9).
10. Governing Law and Resolution of Disputes.
This agreement will be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of
conflicts of laws thereunder. Any claim for damages arising out of or related to
this Agreement except for any claims arising out of or related to Paragraph 5
hereof shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, provided, however,
that the arbitration shall take place in New York and the arbitrators shall
apply New York law. Each party to the Agreement may select one arbitrator. The
selected arbitrators shall in turn appoint a third arbitrator, and the three so
chosen shall comprise the arbitration panel. All arbitrators shall be
independent third parties. The decision of the arbitration panel shall be final
and binding on the parties, and judgment upon the award rendered by the
arbitration panel may be entered by any court having jurisdiction thereof. This
Paragraph shall not be construed to prevent New Reit from seeking injunctive
relief with respect to any and all
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disputes arising out of or related to Paragraph 5 hereof which shall be
adjudicated by a court of competent jurisdiction.
11. Severability.
Whenever possible, each provision and term of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or invalid under such applicable law, then, subject to the
provisions of Paragraph 5(e)(B), such provision or term shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating or
affecting in any manner whatsoever the remainder of such provisions or term or
the remaining provisions or terms of this Agreement.
12. Counterparts.
This Agreement may be executed in separate counterparts, each
of which is deemed to be an original and both of which taken together shall
constitute one and the same agreement.
13. Headings.
The headings of the Paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute a part hereof and
shall not affect the construction or interpretation of this Agreement.
14. Entire Agreement.
This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and
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undertakings, both written and oral, among the parties with respect to the
subject matter hereof.
15. Survival of Agreements.
The covenants made in Paragraph 4 and Paragraph 5 shall
survive the termination of this Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
PHILIPS INTERNATIONAL REALTY CORP.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Petra
Title: President
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxxx
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