EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into by
and among Home Properties, L.P., a New York limited partnership (the "Company"),
Home Properties, Inc., a Maryland corporation ("HME") and Xxxxxx X. Xxxxxxxxxx,
an individual (the "Employee").
WHEREAS, the Company and the Employee desire to amend and restate the
Employee's existing Employment Agreement to formalize the terms pursuant to
which the Employee will continue to be employed by the Company.
NOW, THEREFORE, in consideration of the mutual promises, benefits and
covenants herein contained, the parties hereby agree as follows:
1. Term. This Amended and Restated Agreement will be effective on January
1, 2007 ("the Commencement Date") and shall terminate on December 31, 2008 (the
"Expiration Date") unless terminated sooner in accordance with Section 4 of this
Agreement. Unless either party gives written notice of termination of this
Agreement at least 60 days prior to the Expiration Date, this Agreement shall
automatically renew for an additional one-year term, provided that the term of
this Agreement may not extend beyond December 31, 2009.
2. Duties. During the term of this Agreement, subject to the direction and
control of the Board of Directors of HME (the "Board of Directors"), the
Employee shall serve in the capacity of Chief Executive Officer and President of
HME and shall perform and discharge well and faithfully any management and other
duties consistent with the position of Chief Executive Officer and President as
may be assigned to the Employee by the Board of Directors. The Employee shall
devote substantially all of his business time to the interests and business of
the Company, HME and their subsidiaries and affiliates except during a customary
vacation period of four weeks per year, periods of illness and other absences
beyond his control.
3. Compensation, Benefits and Expenses.
3.1 Base Salary. The Base Salary to be paid to the Employee under this
Agreement shall be determined in the discretion of the Compensation Committee of
the Board of Directors (the "Compensation Committee").
3.2 Incentive Compensation. The Employee shall receive incentive
compensation pursuant to the Company's Incentive Compensation Plan. The Company
has the right to change or eliminate the Incentive Compensation Plan at any
time. The incentive compensation to be paid to the Employee in 2007 shall be
based on the Company's performance in 2006, continuing in like progression with
the incentive compensation to be paid in any year based on the Company's prior
year's performance, including the incentive compensation to be paid to the
Employee in the year following the termination of this Agreement, which shall be
based on the Company's performance in the year of termination. Notwithstanding
the above, the Employee acknowledges that whether any incentive compensation is
to be paid and the amount of that incentive compensation is completely in the
discretion of the Compensation Committee.
3.3 Stock Option Grants and Restricted Stock Awards. On an annual basis,
the Company shall review the performance of the Company and the Employee and the
Company may provide the Employee with additional compensation in the form of
long-term equity incentives, such as stock options and restricted stock, if the
Compensation Committee determines that the performance of the Company and the
Employee's contribution to the Company warrant the payment of such additional
consideration.
3.4 Fringe Benefits. During the period of the Employee's employment, the
Company shall provide the Employee with such fringe benefits as shall be
determined by the Compensation Committee, provided such fringe benefits shall be
no less favorable than those provided to other senior executives of the Company,
HME or their subsidiaries or affiliates.
3.5 Expenses. During the term of this Agreement, the Company authorizes the
Employee to incur reasonable and necessary expenses in the course of performing
his duties and rendering services under this Agreement, and the Company shall
reimburse the Employee for all such expenses within 30 days after the Employee
renders to the Company an account of such expenses and such other substantiation
as the Company may reasonably request. At the Company's corporate office, the
Company shall provide the Employee with an office, office equipment and
appropriate clerical support to discharge Employee's duties under this
Agreement.
4. Termination.
4.1 Termination. This Agreement may be terminated by the Company (after
approval by the Board of Directors) at any time, with or without "Cause," or by
the Employee at any time, with or without "Good Reason."
4.2 Definition of Cause. As used herein, "Cause" shall be determined by the
Corporate Governance/Nominating Committee of the Board of Directors (the
"Corporate Governance/Nominating Committee") in the reasonable and good faith
exercise of its discretion, and shall mean: (a) dishonest or fraudulent actions
by the Employee in the conduct of his duties for the Company or the conviction
of the Employee of a felony; (b) death of the Employee; (c) a material failure
by the Employee to devote substantially all of his business time to the business
of the Company; (d) a material failure by the Employee to follow the Company's
good faith instructions and directives that is not cured by the Employee within
60 days after receiving notice; (e) unreasonable and material neglect, refusal
or failure by the Employee to perform the duties assigned to him that is not
cured by the Employee within 60 days after receiving notice; (f) the Employee's
material breach of this Agreement that is not cured by the Employee within 60
days after receiving notice; (g) the Employee's material breach of any portion
of Section 6 of this Agreement; (h) the Employee's breach of the Code of
Business Conduct and Ethics of Home Properties, Inc. and its Affiliated
Companies and/or the Company's Code of Ethics for Senior Financial Officers (the
"Code of Ethics"); (i) any other act or omission which subjects the Company, HME
or their subsidiaries or affiliates to substantial public disrespect, scandal or
ridicule; (j) any governmental regulatory agency recommends or orders that the
Company terminate the employment of the Employee or relieve him of his duties;
or (k) any physical or mental disability of the Employee that prevents him from
performing his duties for 90 consecutive days or for an aggregate of 180 days in
any 12-month period.
4.3 Definition of Good Reason. As used herein, "Good Reason" shall mean:
(a) a material breach of this Agreement by the Company or HME that is not cured
within 60 days after receiving notice of such breach, with the determination as
to whether there has been a breach and whether the breach is material to be
determined by the Corporate Governance/Nominating Committee in the reasonable
and good faith exercise of its discretion; or (b) any requirement by the Company
that the Employee relocate to a principal place of business outside of the
Rochester, New York metropolitan area.
4.4 Termination for Cause or Without Good Reason. In the event that: (a)
the Company terminates this Agreement for Cause; or (b) the Employee resigns or
terminates without Good Reason, then the Employee's rights to receive any
payments and benefits pursuant to this Agreement shall, effective upon the date
of termination, terminate in all respects, except that the Company shall pay to
the Employee any payments and benefits hereunder that are accrued and unpaid up
to such date (which amount shall not include any incentive compensation under
the Company's Incentive Plan for services rendered during the year in which the
termination occurs), and shall reimburse the Employee for any expenses incurred
as of such date pursuant to Section 3.5 of this Agreement. In the event of any
termination described in this Section 4.4, then all rights of any kind under any
existing stock option held by the Employee shall expire immediately and all
shares of restricted stock held by the Employee as to which the restrictions
have not lapsed in accordance with the provision of the award shall be
forfeited.
4.5 Termination Without Cause or for Good Reason.
4.5.1 Separation Pay. In the event that (a) the Company terminates this
Agreement for any reason other than for Cause, or (b) the Employee resigns or
terminates with Good Reason, then the Company shall pay to the Employee any
payments and benefits hereunder that are accrued and unpaid up to, and shall
reimburse the Employee for any expenses incurred pursuant to Section 3.5 of this
Agreement prior to, the date of termination.
4.5.2 Additional Separation Pay. In the event of a termination of this
Agreement described in Section 4.5.1 of this Agreement, if the Employee executes
the release and waiver under Section 4.5.3 of this Agreement and such release is
not revoked, and the Employee has complied with Section 4.9 of this Agreement,
then in addition to the payments to be made pursuant to Section 4.5.1 of this
Agreement: (i) the Company shall pay to the Employee within 20 business days
after termination (but no earlier than the expiration of the revocation period
for the release), a lump sum equal to the greater of 2.9 multiplied by (x) the
Employee's Base Salary, and (y) incentive compensation determined in accordance
with Section 3.2 of this Agreement for the year preceding the date of
termination; (ii) the Company shall pay to the Employee prior to March 31st of
the year following termination, the incentive compensation that the Employee
would have earned based on his targeted bonus as provided in Section 3.2 of this
Agreement pro-rated for the portion of the year that the Employee was an
employee; (iii) all restrictions on restricted stock held by the Employee shall
lapse; (iv) all options previously issued to the Employee shall vest and remain
exercisable until the earlier of their expiration date or one year following the
date of termination; and (v) the fringe benefits provided to the Employee during
the Term of this Agreement pursuant to Section 3.3 of this Agreement shall
continue until the earlier to occur of (A) December 31, 2010, or (B) the
Employee receives substantially equivalent benefits from a subsequent employer.
In the event that the termination occurs before the amount of the incentive
compensation for services rendered in the year preceding the date of termination
has been finally determined, then the payment to the Employee shall be an
estimate based on the Employee's targeted bonus with an adjustment to be made
promptly upon the determination of the actual amount pursuant to the Company's
Incentive Compensation Plan.
4.5.3 Release and Waiver. In exchange for the additional consideration
under Section 4.5.2 of this Agreement, the Employee shall release the Company,
HME and their affiliates, and their directors, officers, employees,
shareholders, partners, agents and assigns from any and all claims and
obligations that arise out of or are in any way related to events, acts or
omissions occurring at any time prior to or at the time of Employee's
termination. Notwithstanding the foregoing, the Employee shall not be required
to release the Company, HME or their affiliates from: (i) any obligation to
indemnify the Employee pursuant to the articles and bylaws of the Company, any
valid fully executed indemnification agreement with the Company, any applicable
directors and officers liability insurance policy, and applicable law; or (ii)
any obligations to make payments to the Employee under Section 4 of this
Agreement.
The Employee shall acknowledge that: (A) he is knowingly and voluntarily
waiving and releasing any rights he may have under the Age Discrimination in
Employment Act ("ADEA"); (B) that the consideration given for the waiver and
release (i.e., the additional consideration to be provided under Section 4.5.2
of this Agreement) is in addition to anything of value to which he is already
entitled; and (C) that he has been advised, as required by the ADEA, that: (1)
his waiver and release does not apply to any rights or claims that may arise
after the date that he signs such release; (2) he should consult with an
attorney prior to signing the release (although he may choose voluntarily not to
do so); (3) he has 21 days from the date he receives the proposed release to
consider the release (although he may choose voluntarily to sign it earlier);
(4) he has seven days following the date he signs the release to revoke the
release by providing written notice of his revocation to the Board of Directors;
and (5) the release will not be effective until the date upon which the
revocation period has expired, which will be the eighth day after the date that
the release is signed by the Employee.
The claims included in this release and waiver do not include vested
rights, if any, under any qualified retirement plan in which Employee
participates, and his COBRA, unemployment compensation and worker's compensation
rights, if any. Nothing in this release shall be construed to constitute a
waiver of (a) any claims Employee may have against the Employer that arise from
acts or omissions that occur after the effective date of this Release, (b)
Employee's right to file an administrative charge with any governmental agency
concerning the termination of that employment or (c) Employee's right to
participate in any administrative or court investigation, hearing or proceeding.
Employee agrees, however, to waive and release any right to receive any
individual remedy or to recover any individual monetary or non-monetary damages
as a result of any such administrative charge or proceeding. In addition, this
release does not affect Employee's rights as expressly created by this
Agreement, and does not limit his ability to enforce this Agreement.
4.6 Termination Following A Change of Control. In the event of a "Change of
Control" as defined in the Company's Executive Retention Plan (including any and
all amendments thereto) (the "Retention Plan") and a subsequent termination of
the Employee's employment either by the Company or the Employee as described in
Section 3(a) of the Retention Plan, the benefits to be paid to the Employee upon
such a termination shall be as provided in the Executive Retention Plan, except
that the Employee shall be paid three times his Base Salary (as defined in the
Retention Plan) and three times the last bonus which was awarded to him under
the Bonus Plan (as defined in the Retention Plan).
4.7 Definition of Termination. For the purpose of any payments or
reimbursements to be made, or any benefits to be continued, by the Company to
the Employee under this Section 4 as a result of the Employee's termination,
"termination" shall mean a "separation of service" [as such term is defined in
Section 409A of the Internal Revenue Code of 1986, as amended (the "Code")].
4.8 Delay or Reduction of Payments, Reimbursements and Benefits.
4.8.1 Section 409A of the Code. Notwithstanding any provision of this
Section 4 to the contrary, if the Employee is a "specified employee" (as such
term is defined in Section 409A of the Code) at the time of his termination,
then, to the extent necessary to prevent any excise tax to the Employee under
Section 409A of the Code: (a) any payments or reimbursements that would
otherwise be made by the Company pursuant to this Section 4 before the first day
of the seventh month following the Employee's termination instead shall be
accumulated and paid on the first day of the seventh month following the
Employee's termination; and (b) if any of the benefits that would otherwise be
provided by the Company pursuant to this Section 4 before the first day of the
seventh month following the Employee's termination are treated as deferred
compensation for purposes of Section 409A of the Code, then the Employee shall
bear the full cost of such benefits during such period, and the Company shall
reimburse the Employee for any out-of-pocket costs so incurred on the first day
of the seventh month following the Employee's termination. This Section 4.8 is
intended to delay payments, reimbursements and benefits to the Employee
following termination only if such delay is required by Section 409A of the
Code, and shall be construed accordingly. Unless necessary to prevent any excise
tax to the Employee under Section 409A of the Code, this Section 4.8 shall not
apply in the event of the Employee's termination as a result of his death or his
disability (if such disability qualifies as a "disability" for purposes of
Section 409A of the Code). Notwithstanding any provision of this Section 4 to
the contrary, to the extent that the continuation of the exercise period of any
stock option under Section 4.7 of this Agreement would subject the Employee to
any excise tax under Section 409A of the Code, then the exercise period of such
stock option shall only be extended to the latest possible date that would not
subject the Employee to such excise tax.
4.8.2 Section 162(m) of the Code. To the extent that any payment to be made
to the Employee under this Section 4 would be non-deductible by the Company as a
result of the $1 million compensation limit provisions of Section 162(m) of the
Code, then such payment shall not be made to the Employee at that time, but
shall instead, to the extent permissible under Section 409A of the Code, be
deferred and paid without interest to the Employee in the first month of the
taxable year in which such amount is fully deductible by the Company under
Section 162(m) of the Code.
4.8.3 Section 280G of the Code. In the event that the vesting of the stock
options together with all other payments and the value of any benefit received
or to be received by the Employee would result in all or a portion of such
payment being subject to excise tax under Section 4999 of the Code (the "Excise
Tax"), then the Employee's payment shall be either (a) the full payment or (b)
such lesser amount that would result in no portion of the payment being subject
to the Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state, and local employment taxes, income taxes, and the
Excise Tax, results in the receipt by the Employee, on an after-tax basis, of
the greatest amount of the payment notwithstanding that all or some portion of
the payment may be taxable under Section 4999 of the Code. All determinations
required to be made under this Section 4.8.3 shall be made by the nationally
recognized accounting firm which is the Company's outside auditor immediately
prior to the event triggering the payments that are subject to the Excise Tax,
which firm must be reasonably acceptable to the Employee (the "Accounting
Firm"). The Company shall cause the Accounting Firm to provide detailed
supporting calculations of its determinations to the Company and the Employee.
Notice must be given to the Accounting Firm within 15 business days after an
event entitling the Employee to a payment under this Section 4. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. The
Accounting Firm's determinations must be made with substantial authority (within
the meaning of Section 6662 of the Code).
4.9 No Voluntary Adverse Assistance. The Employee agrees that he will not
voluntarily assist any other person in preparing, bringing, or pursuing any
litigation, arbitration, administrative claim or other formal proceeding against
the Company, HME or their subsidiaries or affiliates, or their officers,
directors, employees or partners unless pursuant to subpoena or other compulsion
of law.
5. Notices. Any notices or other communications under this Agreement shall
be in writing and shall be given by personal delivery or by a nationally
recognized overnight delivery service, and shall be deemed given when personally
delivered, or on the next business day following delivery to a nationally
recognized overnight delivery service: (a) if to the Employee, addressed to his
last address on record with the Company; and (b) if to the Company, addressed
to: Home Properties, L.P., 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, Attn: Xxxxxx
Xxxxx and Xxx XxXxxxxxx; or to such other address or addresses as either party
shall have specified in writing to the other party hereto. Any notices to be
issued hereunder by the Company shall be issued by the Corporate
Governance/Nominating Committee on behalf of the Company.
6. Covenants as to Confidential Information and Non-Compete.
6.1 Non-Compete. The Employee recognizes that by virtue of his status as an
employee and a member of the Board of Directors, he is obligated to uphold his
fiduciary and other obligations to the Company and HME, and to comply with all
of the restrictions set forth in the Code of Ethics, which is attached hereto
and incorporated herein by reference. The Employee acknowledges and agrees that
he will fully and faithfully abide by the Code of Ethics for so long as he is an
employee and/or a member of the Board of Directors. In addition, the Employee
acknowledges and recognizes the highly competitive nature of the Company's
business and agrees that during the term of this Agreement, and in the event
this Agreement is terminated for any reason other than with Cause or without
Good Reason, until January 1, 2010, the Employee will not, directly or
indirectly, without the written consent of the Real Estate Investment Committee
of the Board of Directors, own, manage, operate, control, be employed by, or
participate in or be connected with any entity owning or having financial
interest in, whether direct or indirect, a business entity which is in the
business of owning, operating, acquiring, developing or otherwise dealing in
Market-Rate (as subsequently defined) multifamily residential real properties in
the United States and Canada. In addition, in the event this Agreement is
terminated for Cause or without Good Reason then, for two years after the
termination of this Agreement, the Employee will not, directly or indirectly,
without the written consent of the Real Estate Investment Committee of the Board
of Directors, own, manage, operate, control, be employed by, or participate in
or be connected with any entity owning or having financial interest in, whether
direct or indirect, a business entity which is in the business of owning,
operating, acquiring, developing or otherwise dealing in Market-Rate multifamily
residential real properties in the United States and Canada. A property shall be
deemed "Market-Rate" if there is no project-based governmental assistance for
residents of the property, if there is no government subsidized interest rates
that apply to the financing for the property and if no interests in the entity
owning the property have been sold to a third party for purposes of that party
acquiring tax credit benefits. From and after the termination of this Agreement
for any reason the above restrictions shall not be violated if and to the extent
that the Employee owns, manages, operates, controls, is employed by or
participates in or is connected with any entity owning or having a financial
interest in a business entity which owns, operates, acquires, develops or
otherwise deals in any multifamily residential real property consisting of: (a)
50 or fewer apartment units wherever located; (b) 200 or fewer apartment units
if the property is located in a state in which the Company does not own real
property at the time that the acquisition or transaction occurs; and/or (c) to
the extent that the Employee's interest in any entity consists of less than a 5%
limited partnership interest in the case of a partnership and less than 5% of
the outstanding vesting shares in the case of a corporation in all cases so long
as such ownership, management, operation or control does not violate the Code of
Ethics.
6.2 Confidential Information. In addition to the obligations of
confidentiality as set forth in the Code of Ethics, the Employee recognizes and
acknowledges the existence of confidential business matters, trade secrets, and
proprietary information of the Company and HME, including but not limited to
customer lists sales, products, markets, inventions, marketing strategies and
plans, research, practices, procedures, current and planned corporate
strategies, strategic customers and business partners, and the identity, skills
and interest of its employees, which matters are valuable, special, and unique
assets of the Company's and HME's business. The Employee shall not, during or
after the term of employment with the Company, disclose the Company's or HME's
confidential business matters to any person, firm, corporation, partnership,
association or other entity for any reason or purpose whatsoever, without the
prior written consent of the Board of Directors, except as required by law or
pursuant to legal process.
6.3 Remedies for Breach of this Section 6. The Employee further
acknowledges that (a) compliance with all of this Section 6 is necessary to
protect the Company's and HME's business and goodwill; (b) a breach of this
Section 6 will irreparably and constitutionally damage the Company and HME; and
(c) an award of money damages will not be adequate to remedy such harm.
Consequently, the Employee agrees that, and in addition to other remedies, in
the event he breaches or threatens to breach any of these covenants, the Company
and HME shall be entitled to both: (1) a preliminary or permanent injunction to
prevent the continuation of such harm; and (2) money damages, insofar as they
can be determined, including, without limitation, all reasonable costs and
attorneys' fees incurred by the Company and/or HME in the enforcement of the
provision.
6.4 Enforceability. The Employee acknowledges and agrees that the
provisions of this Agreement are reasonable and necessary for the protection of
the Company and HME. If, however, a final judicial determination is made by a
court having jurisdiction that the time or territory or any other restriction
contained in Section 6.1 of this Agreement is an unreasonable or otherwise
unenforceable restriction against the Employee, the provisions of Section 6.1 of
this Agreement shall not be rendered void, but rather shall be deemed amended to
apply as to the maximum time and territory and to the other extent as this court
may judicially determine or indicate to be reasonable.
7. Breach of Agreement. Each party agrees to indemnify and hold harmless
the others from and against any loss, liability, damages, judgments, suits,
costs or expenses (including the costs of investigating and enforcing each
party's rights under this Agreement and attorneys' fees and expenses) relating
to or arising from any breach by any party of the terms of this Agreement.
8. Section 409A of the Code. To the extent applicable, it is intended that
this Agreement comply with the provisions of Section 409A of the Code. This
Agreement shall be construed and administered in a manner consistent with this
intent, and any provision that would cause this Agreement to fail to satisfy
Section 409A of the Code shall have no force and effect unless and until such
provision is amended to comply with Section 409A of the Code (which amendment
may be retroactive to the extent permitted by Section 409A of the Code and may
be made by the Company without the consent of the Employee). Any amendment to
the timing and receipt of any payment or benefit provided hereunder shall be
effected in a manner that is intended to be in compliance with Section 409A of
the Code. Any reference in this Agreement to Section 409A of the Code will also
include any proposed, temporary or final regulation, or any other guidance,
promulgated with respect to such section by the U.S. Department of the Treasury
or the Internal Revenue Service.
9. Governing Law. ALL QUESTIONS PERTAINING TO THE VALIDITY, CONSTRUCTION,
EXECUTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO
ITS PRINCIPLES OF CONFLICTS OF LAW.
10. Entire Agreement. This Agreement and the benefit plans referred to
herein constitute the entire agreement of the parties hereto with respect to the
matters contained herein, and no modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
each of the parties hereto. No failure to exercise any right or remedy hereunder
shall operate as a waiver thereof. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns.
11. Headings. The section and subsection headings contained in this
Agreement are for reference purposes only and shall not affect the construction
or interpretation of this Agreement.
12. Counterparts. This Agreement may be executed in several counterparts,
and all counterparts so executed shall constitute one agreement, binding on the
parties hereto, notwithstanding that both parties are not signatory to the
original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
respective dates set forth below, effective as of the latest such date.
HOME PROPERTIES, L.P.
By: Home Properties, Inc.
Its: General Partner
Date: November 20, 2006 By:/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Executive Vice President
HOME PROPERTIES, INC.
Date: November 20, 2006 By:/s/ Xxxxxxxx X. Xxxxx, Xx.
Xxxxxxxx X. Xxxxx, Xx.
Chair of Compensation
Committee of the Board of Directors
Date: November 20, 2006 By: /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
