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EMPLOYMENT AGREEMENT
FOR
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TABLE OF CONTENTS
PAGE
1. EMPLOYMENT. 2
2. SERVICES. 2
3. COMPENSATION AND BENEFITS. 3
4. TERMINATION OF EMPLOYMENT / CHANGE IN CONTROL. 5
5. CONFIDENTIAL INFORMATION / RETURN OF DOCUMENTS / NONCOMPETE. 11
6. SUCCESSORS AND ASSIGNS. 11
7. TIMING OF AND NO DUPLICATION OF PAYMENTS. 13
8. MODIFICATION OR WAIVER. 13
9. NOTICES. 13
10. GOVERNING LAW AND RESOLUTION OF DISPUTES. 14
11. SEVERABILITY. 14
12. COUNTERPARTS. 15
13. HEADINGS. 15
14. ENTIRE AGREEMENT. 15
15. SURVIVAL OF AGREEMENTS. 16
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
December 31, 1997 by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing at ▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Executive"), and Philips
International Realty Corp., a Maryland corporation with offices at c/o Philips
International, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("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 "Contribution and Exchange Agreement"), the Property
Partnerships, National and PRLP have determined that it is 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 have 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 has agreed to contribute
such Property to PRLP, all as of the closing (the "Closing Date");
WHEREAS, Executive has served as a key executive of Philips
International and, through such service, has acquired special and unique
knowledge, abilities and expertise; 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, for a term commencing on the date
hereof and expiring on December 31, 2000; provided, however, that commencing on
December 31, 2000, and each anniversary of that date thereafter, the term of
this Agreement shall be extended automatically for one (1) additional year
unless at least ninety (90) days prior to the applicable expiration date either
New Reit or Executive shall have given written notice that such party does not
wish to extend this Agreement. The term of this Agreement, as it may be extended
from time to time in accordance with this Paragraph 1, is referred to herein as
the "Employment Period."
2. Services.
During the Employment Period, Executive shall hold the
position of Chief Operating Officer and shall serve as a member of the Board of
Directors of New Reit
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(the "Board"). Executive shall devote her best efforts and substantially all of
her business time, skill and attention to the business of New Reit, and shall
perform such duties as are customarily performed by similar executive officers
and as may be more specifically enumerated from time to time by the Board or the
Executive Committee of the Board, if any; provided, however, that the foregoing
is not intended to preclude Executive from (a) owning and managing personal
investments, including real estate investments, subject to the restrictions set
forth in the Non-Competition Agreement by and among PRLP, New Reit, Philips
International Holding Corp., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Executive dated as of December
31, 1997 (the "Non-Competition Agreement"), including without limitation
conducting the real estate development, acquisition or management activities
related to the properties listed in Exhibit A attached to the Non-Competition
Agreement (the "Excluded Properties") or (b) engaging in charitable activities
and community affairs, provided that the performance of these activities
referred to in clauses (a) and (b) does not prevent Executive from devoting
substantially all of her business time to New Reit.
Executive shall be based in New York, NY, subject to
reasonable travel requirements, in an office comparable to the office previously
provided to Executive by Philips International.
3. Compensation and Benefits.
During the Employment Period, New Reit shall pay Executive a
minimum annual base salary in the amount of $175,000 (which may be increased but
not decreased from time to time, (the "Annual Base Salary")), payable in
accordance with New Reit's normal payroll practices. In addition, Executive
shall receive a minimum of
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twenty-five (25%) percent of the annual bonus pool, with the annual bonus pool
to be determined by the Board each year. Executive's Annual Base Salary shall be
reviewed annually in accordance with the policy of New Reit from time to time
and may be increased based on, among other things, Executive's performance, as
determined in the sole discretion of the Board or compensation committee of the
Board ("Compensation Committee"), as applicable. New Reit shall have the right
to deduct and withhold from such compensation all social security and other
federal, state and local taxes and charges which currently are or which
hereafter may be required by law to be so deducted and withheld. In addition to
the compensation specified above, Executive shall be entitled to the following
benefits:
(a) participation in the any bonus, stock based
compensation or other executive compensation plans or
programs made generally available to executives of
New Reit;
(b) medical, life insurance, disability, business travel
accident, paid vacation and any other compensated
absences and any other plans made generally available
to employees of New Reit;
(c) use of a car; and
(d) reimbursement for reasonable business expenses
incurred by Executive in furtherance of the interests
of New Reit.
In addition, Executive shall be entitled to receive restricted share awards and
options to purchase shares of common stock, par value $0.01per share, of New
Reit (the "Common Stock") as the Board shall approve, in its sole discretion.
As further consideration for Executive agreeing to serve as an
officer and entering into this Agreement upon the terms set forth herein,
including, without limitation, the terms relating to non-competition set forth
in the Non-Competition Agreement, subject to shareholder approval of the New
Reit 1997 Stock Option and
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Long Term Incentive Plan (the "Plan") New Reit is issuing to Executive options
to purchase 40,000 shares of Common Stock at a purchase price equal to $50 per
share which is fair market value on the Closing Date ("Options") provided,
however, that after taking into account the Options and any dilution which may
occur with respect to the underlying shares of Common Stock, as a result of the
initial sale to the public of Common Stock for cash, with such level, timing,
and manner of equity raise collectively considered for purposes of this
Agreement to constitute an initial public offering (the "IPO"), upon the
consummation of the IPO, Executive shall have an option to purchase at least
100,000 shares of Common Stock at an exercise price equal to the price paid for
shares of Common Stock by the public in the IPO. Executive's Options shall be
evidenced by the option agreement dated as of the Closing Date which shall
include, but not be limited to, the following provisions: vesting over a three
year period, subject to Executive's continued employment with New Reit and the
provisions of Paragraphs 4(b) and 4(c) below, with one third (1/3) of the
Options vesting on each of the first, second and third anniversaries of the date
hereof and non-transferability and anti-dilution provisions.
4. Termination of Employment / Change in Control.
(a) In the event (i) New Reit terminates Executive's
employment for Cause (as hereinafter defined) or (ii) Executive terminates her
employment without Good Reason (as hereinafter defined), New Reit shall pay
Executive any unpaid salary accrued through and including the date of
termination (the "Accrued Amount"). In addition, in such event, Executive shall
be entitled (i) to exercise any options, including the Options granted
hereunder, which have vested and are exercisable in accordance
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with the terms of this Agreement, the applicable stock option agreement or the
Plan, 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, vested options and vested share awards and 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 (i) Executive's death or Disability (as hereinafter defined),
(ii) termination by New Reit for any reason other than Cause or (iii)
termination by Executive of her employment for Good Reason, New Reit shall pay
to Executive (A) the Accrued Amount, (B) the unpaid salary, at the rate then in
effect without reduction, from the date of termination through the end of the
Employment Period remaining (assuming no such termination occurred) and (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 (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. In the event the Executive
is terminated in the first year of employment, Executive shall receive her
pro-rata portion of the amount that would have otherwise been payable to
Executive in such year had her employment not terminated. The aforesaid amount
shall be payable, at the option of Executive, her estate or her personal
representative, either (i) in full immediately upon such termination without
discount for early payment or (ii) monthly over the remainder of the Employment
Period. In addition, Executive shall have a fully-vested non-forfeitable right
to the Options and any other options or restricted stock
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awards previously granted to her as of the date the applicable event listed in
the first sentence of this Paragraph 4(b) occurs. Executive shall be entitled,
at the option of Executive, her estate or her personal representative, within
ninety (90) days (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) 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 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 Executive's termination of employment.
(c) (i) In the event of a Change in Control (as hereinafter
defined) and irrespective of whether Executive's employment terminates 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 sub-paragraph 4(b) (including vesting
in the Options and all other options and restricted
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stock awards and all benefits under this Agreement) except that Executive must
exercise any options which have vested within ninety (90) days (one (1) year in
the case of termination as a result of Executive's death or Disability) of her
actual termination of employment. Furthermore, all cash payments owed to
Executive pursuant to this Paragraph 4(c)(i) shall be paid to Executive in a
single sum without discount for early payment on or immediately prior to the
date of the Change in Control but prior to the consummation of the transaction
with any successor.
(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 thereto), 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
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1 - [(FI x (1 - SLI)) + SLI + E + M]
where
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);
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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) "Cause" shall mean (A) the willful and
continued failure by Executive to
substantially perform her duties hereunder
(other than any such failure resulting from
Executive's incapacity due to physical or
mental illness) for a period of thirty (30)
days after written demand for substantial
performance is delivered by New Reit
specifically identifying the manner in which
New Reit believes Executive has not
substantially performed her duties, or (B)
willful misconduct by Executive which is
materially injurious to New Reit, monetarily
or otherwise, or (C) the willful violation
by Executive of the provisions of the
Non-Competition Agreement. For purposes of
this Paragraph 4(d)(i), no act, or failure
to act, on Executive's part shall be
considered
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"willful" unless done, or omitted to be
done, by her not in good faith and without
reasonable belief that her action or
omission was in furtherance of the interests
of New Reit.
(ii) "Disability" shall mean the determination by
New Reit, upon the advice of an independent
qualified physician, reasonably acceptable
to Executive, that Executive has become
physically or mentally incapable of
performing her 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.
(iii) "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;
(iv) "Good Reason" shall mean (A) any assignment
to Executive of any duties materially
different from those contemplated by
Paragraph 2 hereof, or any limitation of the
powers of Executive in any respect not
contemplated by Paragraph 2 hereof or other
material breach of this Agreement by New
Reit, (B) a reduction in Executive's Annual
Base Salary as in effect at the time in
question, or any other material failure by
New Reit to comply with Paragraph 3 hereof,
provided, however, that in the event
Executive is not awarded a bonus as a result
of the Board not approving a bonus pool for
a particular year or other discretionary
payment or discretionary award described in
Paragraph 3, it shall not be deemed a
failure, (C) New Reit shall have given
notice pursuant to Paragraph 1 hereof that
it does not wish to extend this Agreement,
except in connection with termination of
Executive's employment for Cause or by
reason of death or Disability, or (D)
failure of New Reit to obtain the assumption
of the obligation to perform this Agreement
by any successor as contemplated in
Paragraph 6(a) hereof.
(v) "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
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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; or (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.
(e) 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. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
5. Confidential Information / Return of Documents / Noncompete.
The Non-Competition Agreement is hereby incorporated by
reference and made a part hereof. The provisions of the Non-Competition
Agreement including without limitation those related to confidential
information, return of documents, non-competition and non-solicitation shall
apply as if fully set forth herein.
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
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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 in the same amount and
on the same terms as she would be entitled to hereunder if she terminated her
employment for Good Reason, 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, without discount
for early payment, immediately prior to the consummation of the transaction with
such successor.
(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 her hereunder if she had continued to live, all such amounts, unless
otherwise provided herein, shall be paid
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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 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.
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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 disputes arising out of or related to
Paragraph 5 hereof which shall be adjudicated by a court of competent
jurisdiction.
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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 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 undertakings, both written and oral, among the parties with
respect to the subject matter hereof.
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15. Survival of Agreements.
The covenants made in Paragraph 4 and those made in the
Non-Competition Agreement shall survive the termination of this Agreement.
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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/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
EXECUTIVE
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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