EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of March 8, 2002, by and between Vornado
Realty Trust, a Maryland real estate investment trust, with its principal
offices at 888 Seventh Avenue, New York, New York 10106 (the "Company") and
Michael D. Fascitelli ("Executive").
WHEREAS, the Company and Executive entered into an Employment
Agreement, dated as of December 2, 1996 (the "1996 Agreement");
WHEREAS, the Company and Executive wish to amend and restate the
1996 Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth below, the parties hereby amend and restate the 1996
Agreement in its entirety and agree as follows:
1. EMPLOYMENT. The Company hereby agrees to continue Executive's
employment as the President of the Company, and Executive hereby accepts such
continued employment, on the terms and conditions hereinafter set forth.
2. TERM. The period of employment of Executive by the Company
hereunder (the "Employment Period") shall commence on January 1, 2002 (the
"Commencement Date") and shall continue through December 31, 2006; PROVIDED
that, commencing on January 1, 2006, and on each January 1 thereafter, the
Employment Period shall automatically be extended for one (1) additional year
unless either party gives written notice not to extend this Agreement prior to
three (3) months before such extension would be effectuated. The Employment
Period may be sooner terminated by either party in accordance with Section 6 of
this Agreement.
3. POSITION AND DUTIES. During the Employment Period, Executive
shall serve as President of the Company, and shall report solely and directly to
Mr. Steven Roth; PROVIDED that, if Mr. Steven Roth is no longer employed by the
Company for any reason, Executive shall report, in respect of his duties and
responsibilities at the Company, solely and directly to the board of trustees of
the Company (the "Board"). Subject to the supervisory powers of Mr. Steven Roth
only, Executive shall have those powers and duties normally associated with the
position of President and trustee and such other powers and duties as may be
prescribed by Mr. Roth and the Board only, PROVIDED that such other powers and
duties are consistent with Executive's position as President and trustee of the
Company. Executive shall devote substantially all of his working time, attention
and energies during normal business hours (other than absences due to illness or
vacation) to the performance of his duties for the Company. Notwithstanding the
above, Executive shall be permitted, to the extent such activities do not
substantially interfere with the performance by Executive of his duties and
responsibilities hereunder or violate Section 10(a), (b) or (c) of this
Agreement, to (i) manage Executive's personal, financial and legal affairs, and
(ii) serve on civic or charitable boards or committees (it being
expressly understood and agreed that Executive's continuing to serve on any such
board and/or committees on which Executive is serving, or with which Executive
is otherwise associated, as of the Commencement Date (each of which has been
disclosed to the Company prior to the execution of this Agreement), shall be
deemed not to interfere with the performance by Executive of his duties and
responsibilities under this Agreement). Executive is currently serving as a
member of the Board and of the board of directors of certain affiliates of the
Company.
4. PLACE OF PERFORMANCE. The principal place of employment of
Executive shall be at the Company's principal executive offices in New York, New
York.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. During the Employment Period the Company
shall pay Executive a base salary at the rate of not less than $1,000,000 per
year ("Base Salary"). Executive's Base Salary shall be paid in approximately
equal installments in accordance with the Company's customary payroll practices.
If Executive's Base Salary is increased by the Company, such increased Base
Salary shall then constitute the Base Salary for all purposes of this Agreement.
(b) COMPANY SHARE OPTION. The Company has granted to Executive
a non-qualified share option (the "Company Share Option") to acquire 3,500,000
shares of the common shares of beneficial interest of the Company, par value
$.04 per share (the "Company Stock"), pursuant to the Company's 1993 Omnibus
Share Plan (the "Company Option Plan"). The Company Share Option is subject to
the terms set forth in the share option agreement attached to the 1996 Agreement
as Exhibit A (the "Company Share Option Agreement") and to the Company Option
Plan. The Company hereby represents and warrants to Executive that (a) the
Company Option Plan has and will have sufficient shares available to effect the
exercise of the Company Share Option and the Company Option Plan has been
approved by its shareholders, (b) the Company Share Option was granted by the
Board or by a compensation committee of the Board satisfying the conditions for
"non-employee directors" under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule16b-3"), (c) the Company Share Option was
properly authorized and approved by the Board and/or its compensation committee,
(d) the Company Stock underlying the Company Share Option has been registered on
Form S-8 and (e) the Company Stock underlying the Company Share Option has been
listed on the New York Stock Exchange. The Company hereby undertakes and agrees
(at no cost to Executive) to have an effective shelf-registration in place in
favor of Executive in respect of the Company Stock underlying the Company Share
Option (the "Company Registration Statement"). The Company Registration
Statement shall be subject to the terms set forth on Exhibit B to the 1996
Agreement.
(c) ALEXANDER'S STOCK OPTION. Alexander's, Inc.
("Alexander's") has granted to Executive a non-qualified stock option (the
"Alexander's Stock Option") to acquire 350,000 shares of the common stock of
Alexander's, par value $1.00 per share (the "Alexander's Stock"), pursuant to
the Alexander's, Inc. Omnibus Stock Plan (the "Alexander's Option Plan"). The
Alexander's Option is subject to the
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terms set forth in the stock option agreement attached to the 1996 Agreement as
Exhibit C (the "Alexander's Stock Option Agreement") and to the Alexander's
Option Plan. The Company hereby represents and warrants to Executive that (a)
the Alexander's Stock Option Plan has sufficient shares available to effect the
exercise of the Alexander's Option and the Alexander's Stock Option Plan has
been approved by its shareholders, (b) the Alexander's Option was granted by the
board of directors of Alexander's or by a compensation committee of the board of
directors of Alexander's satisfying the conditions for non-employee directors
under Rule 16b-3, (c) the Alexander's Option was properly authorized and
approved by the board of directors of Alexander's and/or its compensation
committee, (d) the Alexander's Stock underlying the Alexander's Stock Option has
been registered on Form S-8, and (e) the Alexander's Stock underlying the
Alexander's Stock Option has been properly listed on the New York Stock
Exchange. The Company hereby undertakes and agrees (at no cost to Executive) to
use its best efforts to cause Alexander's to have an effective
shelf-registration in place in favor of Executive in respect of the Alexander's
Stock underlying the Alexander's Option (the "Alexander's Registration
Statement"). The Alexander's Registration Statement shall be subject to the
terms set forth on Exhibit B to the 1996 Agreement.
(d) 2002 UNITS AGREEMENT. The Company and Executive shall
execute on the date of this Agreement a deferred compensation arrangement in the
form of 626,566 convertible units (the "2002 Units") pursuant to an agreement in
the form attached hereto as EXHIBIT A (the "2002 Units Agreement").
(e) RABBI TRUST. In connection with the 2002 Units, the
Company shall, within 60 days from the date of this Agreement, contribute a
certificate for 626,566 shares of Company Stock into the irrevocable "rabbi"
trust established pursuant to the Trust Agreement, dated as of December 2, 1996,
between the Company and The Chase Manhattan Bank, a New York banking corporation
(the "Rabbi Trust"). The Company hereby undertakes and agrees to maintain at no
cost to Executive or the trustee under the Rabbi Trust agreement (attached as
Exhibit F to the 1996 Agreement) the Rabbi Trust in respect of the 919,540
shares of Company Stock held therein pursuant to the 1996 Agreement, as well as
the 626,566 shares of Company Stock to be contributed hereunder.
(f) CONDITION TO RECEIPT OF 2002 UNITS. Notwithstanding
anything in this Section 5 to the contrary, Executive shall have no right to the
amount payable pursuant to the 2002 Units Agreement in the event that, prior to
December 31, 2002, he voluntarily terminates employment hereunder (other than
for Good Reason); PROVIDED that, under no circumstances shall such amount be
forfeited upon Executive's death or a termination of employment due to
Executive's Disability.
(g) AUTOMOBILE. The Company will provide Executive with an
automobile and driver, which automobile shall be a Lincoln Town Car or similar
model.
(h) EXPENSES. The Company shall promptly reimburse Executive
for all reasonable business expenses upon the presentation of reasonably
itemized statements of such expenses in accordance with the Company's policies
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and procedures now in force or as such policies and procedures may be modified
with respect to all senior executive officers of the Company.
(i) VACATION. Executive shall be entitled to the number of
weeks of vacation per year provided to the Company's chief executive officer,
but in no event less than four (4) weeks annually.
(j) SERVICES FURNISHED. During the Employment Period, the
Company shall furnish Executive with office space, stenographic and secretarial
assistance and such other facilities and services comparable to those provided
to the Company's chief executive officer.
(k) COMPANY LOAN. During the Employment Period, upon the
written request of Executive, the Company shall disburse to Executive one or
more loans in the aggregate amount of $20,000,000, less any loan amounts
outstanding pursuant to the 1996 Agreement. Each of such loans shall be on a
revolving principal basis subject to the following terms and conditions:
(i) the loan must be in an amount of at least $500,000;
(ii) the loan shall be full recourse to Executive;
(iii) the principal amount of the loan shall be due and
payable upon the first to occur of (A) Executive's Date of Termination, (B)
the fifth anniversary of the loan's date of disbursement or (C) the final
payment to Executive under the 2002 Units Agreement, provided that under no
circumstances shall the aggregate principal amount of all outstanding loans
(including loans to Executive pursuant to the 1996 Agreement) exceed
one-half (1/2) the sum of (x) the product of (1) the fair market value of
one share of Company Stock and (2) the sum of the number of Convertible
Units (as defined below) and 2002 Units and (y) the total "spread" on all of
Executives outstanding stock options to purchase Company Stock (I.E. the
positive difference between the aggregate fair market value of the Company
Stock underlying all of the Executive's outstanding stock options to
purchase Company Stock and the aggregate exercise price of such options),
and in the event such aggregate principal amount of outstanding loans does
exceed such sum, the excess shall be due and payable immediately;
(iv) the loan shall be subject to interest at the
applicable Federal rate under Section 1274(d) of the Code on the date the
loan is made;
(v) interest on the loan shall be payable quarterly as set
forth in the agreement evidencing the loan (the intent of which will be to
approximate the timing of the Company's regular quarterly dividend
payments);
(vi) there shall be an agreement evidencing the loan and it
shall contain such additional terms and conditions as are reasonably
acceptable to the Executive in good faith; and
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(vii) Executive shall not be required to pledge or
otherwise hypothecate or encumber any of Executive's personal assets in
connection with the loan.
For purposes of clause (iii) of this paragraph, "fair market value" on any given
date shall mean the average of the high and low trading prices of the Company
Stock on such date, as reported on the New York Stock Exchange composite tape
for such date.
(l) WELFARE, PENSION AND INCENTIVE BENEFIT PLANS. During the
Employment Period, Executive (and his spouse and dependents to the extent
provided therein) shall be entitled to participate in and be covered under all
the welfare benefit plans or programs maintained by the Company from time to
time for the benefit of its senior executives including, without limitation, all
medical, hospitalization, dental, disability, accidental death and dismemberment
and travel accident insurance plans and programs, other than any such benefits
provided solely to Mr. Steven Roth. The Company shall at all times provide to
Executive (and his spouse and dependents to the extent provided under the
applicable plans or programs) (subject to modifications affecting all senior
executive officers) the same type and levels of participation and benefits as
are being provided to Mr. Steven Roth (and his spouse and dependents to the
extent provided under the applicable plans or programs) on the Commencement
Date. In addition, during the Employment Period, Executive shall be eligible to
participate in all pension, retirement, savings and other employee benefit plans
and programs maintained from time to time by the Company for the benefit of its
senior executives, other than any such benefits provided solely to Mr. Steven
Roth or any annual incentive or long-term performance plans (other than those
specified or referred to in Section 5).
(m) OTHER BENEFITS. During the Employment Period, the Company
shall provide Executive with the benefits described below:
(i) a $3 million five-year renewable term life insurance
policy;
(ii) a Company-provided medical examination on an annual
basis at a medical clinic selected by Executive and reasonably satisfactory
to the Company's chief executive officer;
(iii) tax preparation and financial planning assistance up
to a maximum value of $15,000 per year; and
(iv) long-term disability insurance coverage with benefits
at a rate of 60% of Base Salary through age sixty-five (65), less any
disability benefits paid under any group long-term disability plan of the
Company.
(n) OFFICES. Executive shall serve, without additional
compensation, as a director or trustee of the Company or any of its wholly-owned
subsidiaries and affiliates, and in one or more executive positions of any of
such subsidiaries and affiliates, PROVIDED that Executive is indemnified for
serving in any and
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all such capacities on a basis no less favorable than is then provided to any
other director, trustee, or executive of such entity.
(o) ADJUSTMENTS TO THE 2002 UNITS. In the event of a spin-off
by the Company to its shareholders, Executive shall receive an appropriate
equitable adjustment to the 2002 Units pursuant to the terms of Section 7(j) of
the 2002 Units Agreement.
6. TERMINATION. Executive's employment hereunder may be
terminated during the Employment Period under the following circumstances:
(a) DEATH. Executive's employment hereunder shall terminate
upon his death.
(b) DISABILITY. If, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have been substantially unable to
perform his duties hereunder for an entire period of six (6) consecutive months,
and within thirty (30) days after written Notice of Termination is given after
such six (6) month period, Executive shall not have returned to the substantial
performance of his duties on a full-time basis, the Company shall have the right
to terminate Executive's employment hereunder for "Disability", and such
termination in and of itself shall not be, nor shall it be deemed to be, a
breach of this Agreement.
(c) CAUSE. The Company shall have the right to terminate
Executive's employment for Cause, and such termination in and of itself shall
not be, nor shall it be deemed to be, a breach of this Agreement. For purposes
of this Agreement, the Company shall have "Cause" to terminate Executive's
employment upon Executive's:
(i) conviction of, or plea of guilty or nolo contendere to,
a felony;
(ii) willful and continued failure to use reasonable best
efforts to substantially perform his duties hereunder (other than such
failure resulting from Executive's incapacity due to physical or mental
illness or subsequent to the issuance of a Notice of Termination by
Executive for Good Reason) after demand for substantial performance is
delivered by the Company in writing that specifically identifies the manner
in which the Company believes Executive has not used reasonable best efforts
to substantially perform his duties; or
(iii) willful misconduct (including, but not limited to, a
willful breach of the provisions of Section 10) that is materially
economically injurious to the Company or Alexander's or to any entity in
control of, controlled by or under common control with the Company or
Alexander's ("Affiliates").
For purposes of this Section 6(c), no act, or failure to act, by Executive shall
be considered "willful" unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of the Company,
Alexander's or any
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Affiliates thereof. Cause shall not exist under paragraph (ii) or (iii) above
unless and until the Company has delivered to Executive a copy of a resolution
duly adopted by a majority of the Board (excluding Executive for purposes of
determining such majority) at a meeting of the Board called and held for such
purpose (after reasonable (but in no event less than thirty (30) days) notice to
Executive and an opportunity for Executive, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of the conduct set forth in paragraph (ii) or (iii) and
specifying the particulars thereof in detail. This Section 6(c) shall not
prevent Executive from challenging in any court of competent jurisdiction the
Board's determination that Cause exists or that Executive has failed to cure any
act (or failure to act) that purportedly formed the basis for the Board's
determination.
(d) GOOD REASON. Executive may terminate his employment for
"Good Reason" within one hundred and twenty (120) days after Executive has
actual knowledge of the occurrence, without the written consent of Executive, of
one of the following events that has not been cured within thirty (30) days
after written notice thereof has been given by Executive to the Company:
(i) the failure of Executive to be appointed to the
position set forth in Section 3;
(ii) the assignment to Executive of duties materially and
adversely inconsistent with Executive's status as President of the Company
or a material and adverse alteration in the nature of Executive's duties
and/or responsibilities, reporting obligations, titles or authority;
(iii) a reduction by the Company in Executive's Base Salary
or a failure by the Company to pay any such amounts when due or any amounts
due under the deferred compensation agreement attached as Exhibit D to the
1996 Agreement (the "Deferred Compensation Agreement"), the convertible
units agreement attached as Exhibit E to the 1996 Agreement (the
"Convertible Units Agreement or the 2002 Units Agreement;
(iv) the relocation of the Company's principal executive
offices or Executive's own office location to a location more than thirty
(30) miles from New York City;
(v) any purported termination of Executive's employment for
Cause which is not effected pursuant to the procedures of Section 6(c) (and
for purposes of this Agreement, no such purported termination shall be
effective);
(vi) the Company's material breach of the Company Share
Option Agreement, the Convertible Units Agreement, the Deferred Compensation
Agreement or the 2002 Units Agreement;
(vii) the Company's failure to provide the benefits set
forth in Section 5(m)(i) or 5(m)(iv) or the failure of the Company to
substantially provide any material employee benefits due to be provided to
Executive (other
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than any such failure not inconsistent with any express provisions contained
herein which failure affects all senior executive officers, not including
for this purpose benefits provided solely to Mr. Steven Roth);
(viii) the Company's failure to provide in all material
respects the indemnification set forth in Section 11 of this Agreement;
(ix) the material breach of the Alexander's Stock Option
Agreement by Alexander's;
(x) the failure by the Company or by Alexander's to provide
Executive, upon the spin-off or distribution of any property by the Company
or Alexander's to their shareholders, with an appropriate equitable
adjustment to the Company Share Option, the Alexander's Share Option, the
convertible units granted pursuant to the Convertible Units Agreement (the
"Convertible Units") or the 2002 Units pursuant to the terms of the Company
Share Option Agreement, the Alexander's Stock Option Agreement, the
Convertible Units Agreement or the 2002 Units Agreement, as applicable;
(xi) a Change in Control of the Company;
(xii) the failure of the Company (i) to list (or to
maintain such listing) for trading on The New York Stock Exchange or (ii) to
register (or to maintain pursuant to the terms set forth on Exhibit B of the
1996 Agreement) the stock underlying the Company Share Option, the
Alexander's Stock Option, the Convertible Units Agreement or the 2002 Units
Agreement pursuant to an effective shelf registration statement on Form S-3
in favor of Executive and the Rabbi Trust trustee;
(xiii) the Company's material failure to disburse the loan
amount in accordance with Section 5(k); or
(xiv) the Company's failure to contribute the annual Rabbi
Trust funding, to the extent such funding is required by the Rabbi Trust
agreement.
Executive's right to terminate his employment hereunder for Good Reason shall
not be affected by his incapacity due to physical or mental illness. Executive's
continued employment during the one hundred and twenty (120) day period referred
to above in this paragraph (d) shall not constitute consent to, or a waiver of
rights with respect to, any act or failure to act constituting Good Reason
hereunder.
(e) WITHOUT CAUSE. The Company shall have the right to
terminate Executive's employment hereunder without Cause by providing Executive
with a Notice of Termination, and such termination shall not in and of itself
be, nor shall it be deemed to be, a breach of this Agreement.
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(f) WITHOUT GOOD REASON. Executive shall have the right to
terminate his employment hereunder without Good Reason by providing the Company
with a Notice of Termination, and such termination shall not in and of itself
be, nor shall it be deemed to be, a breach of this Agreement.
For purposes of this Agreement, a "Change in Control" of the
Company means the occurrence of one of the following events:
(1) individuals who, on the Commencement Date, constitute
the Board (the "Incumbent Trustees") cease for any reason to constitute at
least a majority of the Board, PROVIDED that any person becoming a trustee
subsequent to the Commencement Date whose election or nomination for
election was approved by a vote of at least two-thirds of the Incumbent
Trustees then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee
for trustee, without objection to such nomination) shall be an Incumbent
Trustee; PROVIDED, HOWEVER, that no individual initially elected or
nominated as a trustee of the Company as a result of an actual or threatened
election contest with respect to trustees or as a result of any other actual
or threatened solicitation of proxies by or on behalf of any person other
than the Board shall be an Incumbent Trustee;
(2) any "person" (as such term is defined in Section
3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes,
after the Commencement Date, a "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities eligible to vote for the election of
the Board (the "Company Voting Securities"); PROVIDED, HOWEVER, that an
event described in this paragraph (2) shall not be deemed to be a Change in
Control if any of following becomes such a beneficial owner: (A) the Company
or any majority-owned subsidiary (PROVIDED that this exclusion applies
solely to the ownership levels of the Company or the majority-owned
subsidiary), (B) any tax-qualified, broad-based employee benefit plan
sponsored or maintained by the Company or any majority-owned subsidiary, (C)
any underwriter temporarily holding securities pursuant to an offering of
such securities, (D) any person pursuant to a Non-Qualifying Transaction (as
defined in paragraph (3)), (E) Executive or any group of persons including
Executive (or any entity controlled by Executive or any group of persons
including Executive); or (F) (i) any of the partners (as of the Commencement
Date) in Interstate Properties ("Interstate") including immediate family
members and family trusts or family-only partnerships and any charitable
foundations of such partners (the "Interstate Partners"), (ii) any entities
the majority of the voting interests of which are beneficially owned by the
Interstate Partners, or (iii) any "group" (as described in Rule 13d-5(b)(i)
under the Exchange Act) including the Interstate Partners, PROVIDED that the
Interstate Partners beneficially own a majority of the Company Voting
Securities beneficially owned by such group (the persons in (i), (ii) and
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(iii) shall be individually and collectively referred to herein as,
"Interstate Holders");
(3) the consummation of a merger, consolidation, share
exchange or similar form of transaction involving the Company or any of its
subsidiaries, or the sale of all or substantially all of the Company's
assets (a "Business Transaction"), unless immediately following such
Business Transaction (i) more than 50% of the total voting power of the
entity resulting from such Business Transaction or the entity acquiring the
Company's assets in such Business Transaction (the "Surviving Corporation")
is beneficially owned, directly or indirectly, by the Interstate Holders or
the Company's shareholders immediately prior to any such Business
Transaction, and (ii) no person (other than the persons set forth in clauses
(A), (B), (C), or (F) of paragraph (2) above or any tax-qualified,
broad-based employee benefit plan of the Surviving Corporation or its
affiliates) beneficially owns, directly or indirectly, 30% or more of the
total voting power of the Surviving Corporation (a "Non-Qualifying
Transaction"); or
(4) Board approval of a liquidation or dissolution of the
Company, unless the voting common equity interests of an ongoing entity
(other than a liquidating trust) are beneficially owned, directly or
indirectly, by the Company's shareholders in substantially the same
proportions as such shareholders owned the Company's outstanding voting
common equity interests immediately prior to such liquidation and such
ongoing entity assumes all existing obligations of the Company to Executive
under this Agreement, the 2002 Units Agreement, the Company Share Option
Agreement, the Company Registration Statement, the Alexander's Stock Option
Agreement, the Deferred Compensation Agreement, the Convertible Units
Agreement and the Rabbi Trust agreement.
7. TERMINATION PROCEDURE.
(a) NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive during the Employment Period (other
than termination pursuant to Section 6(a)) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 14.
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.
(b) DATE OF TERMINATION. "Date of Termination" shall mean (i)
if Executive's employment is terminated by his death, the date of his death,
(ii) if Executive's employment is terminated pursuant to Section 6(b), thirty
(30) days after Notice of Termination (PROVIDED that Executive shall not have
returned to the substantial performance of his duties on a full-time basis
during such thirty (30) day period), and (iii) if Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such Notice of Termination.
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8. COMPENSATION UPON TERMINATION OR DURING DISABILITY. In the
event Executive suffers or incurs a Disability as defined in Section 6(b) or his
employment terminates during the Employment Period, the Company shall provide
Executive with the payments and benefits set forth below. Executive acknowledges
and agrees that the payments set forth in this Section 8 constitute liquidated
damages for termination of his employment during the Employment Period.
(a) TERMINATION BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR
GOOD REASON. If Executive's employment is terminated by the Company without
Cause or by Executive for Good Reason:
(i) the Company shall pay to Executive (A) his Base Salary
and accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination, and (B) continued Base Salary
(as provided for in Section 5(a)) for a period of three (3) years following
the Date of Termination; PROVIDED that during the second and third years
following the Date of Termination the Company's obligation to pay continued
Base Salary shall be offset by the economic value of any compensation
actually received (or deferred) for services rendered by Executive to any
other entity;
(ii) the Company shall pay any deferred compensation
payable in accordance with the terms of the Deferred Compensation Agreement,
the Convertible Units Agreement or the 2002 Units Agreement;
(iii) the Company shall maintain in full force and effect,
for the continued benefit of Executive, his spouse and his dependents for a
period of three (3) years following the Date of Termination the medical,
hospitalization, dental, and life insurance programs (including without
limitation the life insurance policy set forth in Section 5(m), but for no
longer than the five-year term of such policy) in which Executive, his
spouse and his dependents were participating immediately prior to the Date
of Termination at the level in effect and upon substantially the same terms
and conditions (including without limitation contributions required by
Executive for such benefits) as existed immediately prior to the Date of
Termination; PROVIDED that, if Executive, his spouse or his dependents
cannot continue to participate in the Company programs providing such
benefits, the Company shall arrange to provide Executive, his spouse and his
dependents with the economic equivalent of such benefits which they
otherwise would have been entitled to receive under such plans and programs
("Continued Benefits"), PROVIDED that such Continued Benefits shall
terminate on the date or dates Executive receives equivalent coverage and
benefits, without waiting period or pre-existing condition limitations,
under the plans and programs of a subsequent employer (such coverage and
benefits to be determined on a coverage-by-coverage or benefit-by-benefit,
basis);
(iv) the Company shall reimburse Executive pursuant to
Section 5(h) for reasonable expenses incurred, but not paid prior to such
termination of employment; and
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(v) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company.
(b) CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON. If Executive's
employment is terminated by the Company for Cause or by Executive (other than
for Good Reason):
(i) the Company shall pay Executive his Base Salary and, to
the extent required by law or the Company's vacation policy, his accrued
vacation pay through the Date of Termination, as soon as practicable
following the Date of Termination;
(ii) the Company shall pay any deferred compensation
payable in accordance with the terms of the Deferred Compensation Agreement,
the Convertible Units Agreement or the 2002 Units Agreement;
(iii) the Company shall reimburse Executive pursuant to
Section 5(h) for reasonable expenses incurred, but not paid prior to such
termination of employment, unless such termination resulted from a
misappropriation of Company funds; and
(iv) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company.
(c) DISABILITY. During any period that Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness ("Disability Period"), Executive shall continue to receive his full Base
Salary set forth in Section 5(a) until his employment is terminated pursuant to
Section 6(b). In the event Executive's employment is terminated for Disability
pursuant to Section 6(b):
(i) the Company shall pay to Executive (A) his Base Salary
and accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination, and (B) continued Base Salary
(as provided for in Section 5(a)) and Continued Benefits for the longer of
(i) six (6) months or (ii) the date on which Executive becomes entitled to
long-term disability benefits under the applicable plan or program of the
Company paying the benefits described in Section 5(m)(iv), up to a maximum
of three (3) years of Base Salary continuation;
(ii) the Company shall pay any deferred compensation
payable in accordance with the terms of the Deferred Compensation Agreement,
the Convertible Units Agreement or the 2002 Units Agreement;
(iii) the Company shall reimburse Executive pursuant to
Section 5(h) for reasonable expenses incurred, but not paid prior to such
termination of employment; and
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(iv) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company.
(d) DEATH. If Executive's employment is terminated by his
death:
(i) the Company shall pay in a lump sum to Executive's
beneficiary, legal representatives or estate, as the case may be,
Executive's Base Salary through the Date of Termination and one (1) times
Executive's annual rate of Base Salary, and shall provide Executive's spouse
and dependents with Continued Benefits for one (1) year;
(ii) the Company shall pay any deferred compensation
payable in accordance with the terms of the Deferred Compensation Agreement,
the Convertible Units Agreement or the 2002 Units Agreement;
(iii) the Company shall reimburse Executive's beneficiary,
legal representatives, or estate, as the case may be, pursuant to Section
5(h) for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iv) Executive's beneficiary, legal representatives or
estate, as the case may be, shall be entitled to any other rights,
compensation and benefits as may be due to any such persons or estate in
accordance with the terms and provisions of any agreements, plans or
programs of the Company.
(e) FAILURE TO EXTEND. A failure to extend the Agreement
pursuant to Section 2 by either party shall not be treated as a termination of
Executive's employment for purposes of this Agreement.
9. MITIGATION. 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 amounts due Executive under this Agreement
on account of subsequent employment except as specifically provided herein.
Additionally, amounts owed to Executive under this Agreement, the 2002 Units
Agreement, the Deferred Compensation Agreement or the Convertible Units
Agreement shall not be offset by any claims the Company may have against
Executive (other than an offset for any due and payable loan amounts under
Section 5(k) excluding the Deferred Compensation Agreement) and, except with
respect to such loan amounts, as set forth above, the Company's obligation to
make the payments provided for in this Agreement, the 2002 Units Agreement, the
Deferred Compensation Agreement or the Convertible Units Agreement, and
otherwise to perform its obligations hereunder, shall not be affected by any
other circumstances, including, without limitation, any counterclaim,
recoupment, defense or other right which the Company may have against Executive
or others.
10. CONFIDENTIAL INFORMATION, OWNERSHIP OF DOCUMENTS;
NON-COMPETITION.
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(a) CONFIDENTIAL INFORMATION. Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets and
confidential information, knowledge or data relating to the Company and its
businesses and investments, which shall have been obtained by Executive during
Executive's employment by the Company and which is not generally available
public knowledge (other than by acts by Executive in violation of this
Agreement). Except as may be required or appropriate in connection with his
carrying out his duties under this Agreement, Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
any legal process, or as is necessary in connection with any adversarial
proceeding against the Company (in which case Executive shall use his reasonable
best efforts in cooperating with the Company in obtaining a protective order
against disclosure by a court of competent jurisdiction), communicate or divulge
any such trade secrets, information, knowledge or data to anyone other than the
Company and those designated by the Company or on behalf of the Company in the
furtherance of its business or to perform duties hereunder.
(b) REMOVAL OF DOCUMENTS; RIGHTS TO PRODUCTS. All records,
files, drawings, documents, models, equipment, and the like relating to the
Company's business, which Executive has control over shall not be removed from
the Company's premises without its written consent, unless such removal is in
the furtherance of the Company's business or is in connection with Executive's
carrying out his duties under this Agreement and, if so removed, shall be
returned to the Company promptly after termination of Executive's employment
hereunder, or otherwise promptly after removal if such removal occurs following
termination of employment. Executive shall assign to the Company all rights to
trade secrets and other products relating to the Company's business developed by
him alone or in conjunction with others at any time while employed by the
Company.
(c) PROTECTION OF BUSINESS. During the Employment Period and
until the first anniversary of Executive's Date of Termination (but only in the
event Executive is terminated by the Company for Cause, Executive terminates
employment without Good Reason or Executive is terminated by the Company for
Disability), the Executive will not (i) engage, anywhere within the geographical
areas in which the Company, Alexander's or any of their Affiliates (the
"Designated Entities") are conducting their business operations or providing
services as of the Date of Termination, in any business which is being engaged
in by the Designated Entities as of the Date of Termination or pursue or attempt
to develop any project known to Executive and which the Designated Entities are
pursuing, developing or attempting to develop as of the Date of Termination,
unless such project has been inactive for over nine (9) months (a "Project"),
directly or indirectly, alone, in association with or as a shareholder,
principal, agent, partner, officer, director, employee or consultant of any
other organization, (ii) divert to any entity which is engaged in any business
conducted by the Designated Entities in the same geographic area as the
Designated Entities, any Project or any customer of any of the Designated
Entities, or (iii) solicit any officer, employee (other than secretarial staff)
or consultant of any of the Designated Entities to leave the employ of any of
the Designated Entities. Notwithstanding the preceding sentence, Executive shall
not be prohibited from owning less than one (1%) percent of any publicly traded
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corporation, whether or not such corporation is in competition with the Company.
If, at any time, the provisions of this Section 10(c) shall be determined to be
invalid or unenforceable, by reason of being vague or unreasonable as to area,
duration or scope of activity, this Section 10(c) shall be considered divisible
and shall become and be immediately amended to only such area, duration and
scope of activity as shall be determined to be reasonable and enforceable by the
court or other body having jurisdiction over the matter; and Executive agrees
that this Section 10(c) as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.
(d) INJUNCTIVE RELIEF. In the event of a breach or threatened
breach of this Section 10, Executive agrees that the Company shall be entitled
to injunctive relief in a court of appropriate jurisdiction to remedy any such
breach or threatened breach, Executive acknowledging that damages would be
inadequate and insufficient.
(e) CONTINUING OPERATION. Except as specifically provided in
this Section 10, the termination of Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 10.
11. INDEMNIFICATION.
(a) GENERAL. The Company agrees that if Executive is made a
party or a threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that Executive is or was a trustee, director or officer of
the Company, Alexander's or any subsidiary of such entities or is or was serving
at the request of the Company, Alexander's or any subsidiary as a trustee,
director, officer, member, employee or agent of another corporation or a
partnership, joint venture, trust or other enterprise, including, without
limitation, service with respect to employee benefit plans, whether or not the
basis of such Proceeding is alleged action in an official capacity as a trustee,
director, officer, member, employee or agent while serving as a trustee,
director, officer, member, employee or agent, Executive shall be indemnified and
held harmless by the Company to the fullest extent authorized by Maryland law,
as the same exists or may hereafter be amended, against all Expenses incurred or
suffered by Executive in connection therewith, and such indemnification shall
continue as to Executive even if Executive has ceased to be an officer,
director, trustee or agent, or is no longer employed by the Company or
Alexander's and shall inure to the benefit of his heirs, executors and
administrators.
(b) EXPENSES. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, losses, judgments, liabilities,
fines, penalties, excise taxes, settlements, and costs, attorneys' fees,
accountants' fees, and disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to indemnification
under this Agreement.
(c) ENFORCEMENT. If a claim or request under this Agreement is
not paid by the Company or on its behalf, within thirty (30) days after a
written claim or
15
request has been received by the Company, Executive may at any time thereafter
bring suit against the Company to recover the unpaid amount of the claim or
request and if successful in whole or in part, Executive shall be entitled to be
paid also the expenses of prosecuting such suit. All obligations for
indemnification hereunder shall be subject to, and paid in accordance with,
applicable Maryland law.
(d) PARTIAL INDEMNIFICATION. If Executive is entitled under
any provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof, the
Company, shall nevertheless indemnify Executive for the portion of such Expenses
to which Executive is entitled.
(e) ADVANCES OF EXPENSES. Expenses incurred by Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of Executive that the Company pay such Expenses; but, only in the event
that Executive shall have delivered in writing to the Company (i) an undertaking
to reimburse the Company for Expenses with respect to which Executive is not
entitled to indemnification and (ii) an affirmation of his good faith belief
that the standard of conduct necessary for indemnification by the Company has
been met.
(f) NOTICE OF CLAIM. Executive shall give to the Company
notice of any claim made against him for which indemnification will or could be
sought under this Agreement. In addition, Executive shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Executive's power and at such times and places as are convenient for Executive.
(g) DEFENSE OF CLAIM. With respect to any Proceeding as to
which Executive notifies the Company of the commencement thereof:
(i) The Company will be entitled to participate therein at
its own expense; and
(ii) Except as otherwise provided below, to the extent that
it may wish, the Company will be entitled to assume the defense thereof,
with counsel reasonably satisfactory to Executive, which in the Company's
sole discretion may be regular counsel to the Company and may be counsel to
other officers and directors of the Company, Alexander's or any subsidiary.
Executive also shall have the right to employ his own counsel in such
action, suit or proceeding if he reasonably concludes that failure to do so
would involve a conflict of interest between the Company and Executive, and
under such circumstances the fees and expenses of such counsel shall be at
the expense of the Company.
(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of any
action or claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty or
limitation on
16
Executive without Executive's written consent. Neither the Company nor
Executive will unreasonably withhold or delay their consent to any proposed
settlement.
(h) NON-EXCLUSIVITY. The right to indemnification and the
payment of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 11 shall not be exclusive of any other
right which Executive may have or hereafter may acquire under any statute,
provision of the declaration of trust or certificate of incorporation or by-laws
of the Company, Alexander's or any subsidiary, agreement, vote of shareholders
or disinterested directors or trustees or otherwise.
12. LEGAL FEES AND EXPENSES. The Company shall reimburse
Executive promptly following the Commencement Date for all legal fees and
expenses reasonably incurred by Executive in connection with Executive and the
Company entering into this Agreement and the 2002 Units Agreement, upon receipt
of reasonable written evidence of such fees and expenses. If any contest or
dispute shall arise between the Company or Alexander's and Executive regarding
any provision of this Agreement, the Rabbi Trust agreement, the Company
Registration Statement, the Alexander's Registration Statement, or the
Alexander's Stock Option Agreement, the Company shall reimburse Executive for
all legal fees and expenses reasonably incurred by Executive in connection with
such contest or dispute, but only if Executive is successful in respect of
substantially all of Executive's claims brought and pursued in connection with
such contest or dispute. Such reimbursement shall be made as soon as practicable
following the resolution of such contest or dispute (whether or not appealed) to
the extent the Company receives reasonable written evidence of such fees and
expenses.
13. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. No rights or obligations of the
Company under this Agreement may be assigned or transferred except that the
Company will 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 the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets (by merger, purchase or otherwise) which
executes and delivers the agreement provided for in this Section 13 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) EXECUTIVE'S SUCCESSORS. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive other
than his rights to payments or benefits hereunder, which may be transferred only
by will or the laws of descent and distribution. Upon Executive's death, this
Agreement and all rights of Executive hereunder shall inure to the benefit of
and be enforceable by Executive's beneficiary or beneficiaries, personal or
legal representatives, or estate, to the extent any
17
such person succeeds to Executive's interests under this Agreement. Executive
shall be entitled to select and change a beneficiary or beneficiaries to receive
any benefit or compensation payable hereunder following Executive's death by
giving the Company written notice thereof. In the event of Executive's death or
a judicial determination of his incompetence, reference in this Agreement to
Executive shall be deemed, where appropriate, to refer to his beneficiary(ies),
estate or other legal representative(s). If Executive should die following his
Date of Termination 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 such person or
persons so appointed in writing by Executive, or otherwise to his legal
representatives or estate.
14. NOTICE. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered either personally or
by United States certified or registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Executive:
Michael D. Fascitelli
888 Seventh Avenue
New York, New York 10106
with a copy to:
Stephen W. Skonieczny
Dechert
30 Rockefeller Plaza
New York, NY 10112-2200
If to the Company:
Vornado Realty Trust
888 Seventh Avenue
New York, New York 10106
Attention: Steven Roth
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. MISCELLANEOUS. No provisions of this Agreement may be
amended, modified, or waived unless such amendment or modification is agreed to
in writing signed by Executive and by a duly authorized officer of the Company,
and such waiver is set forth in writing and signed by the party to be charged.
No waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
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agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The respective rights and obligations
of the parties hereunder of this Agreement shall survive Executive's termination
of employment and the termination of this Agreement to the extent necessary for
the intended preservation of such rights and obligations. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles.
16. VALIDITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement amends and restates the 1996
Agreement in its entirety and along with the 2002 Units Agreement, the Company
Share Option Agreement, the Company Registration Statement, the Alexander's
Stock Option Agreement, the Deferred Compensation Agreement, the Convertible
Units Agreement and the Rabbi Trust agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of such
subject matter. Any other prior agreement of the parties hereto in respect of
the subject matter contained herein is hereby terminated and cancelled, other
than any outstanding stock option or restricted stock agreements or any
compensatory plan or program in which the Executive is a participant on the
Commencement Date.
19. WITHHOLDING. All payments hereunder shall be subject to any
required withholding of Federal, state and local taxes pursuant to any
applicable law or regulation.
20. NONCONTRAVENTION. The Company represents that the Company is
not prevented from entering into, or performing this Agreement by the terms of
any law, order, rule or regulation, its by-laws or declaration of trust, or any
agreement to which it is a party, other than which would not have a material
adverse effect on the Company's ability to enter into or perform this Agreement.
21. TRUSTEE. In the event any successor to the Company is a
corporation, all references herein to "trustee" or "Board of Trustees" shall
mean "director" or "Board of Directors", respectively.
22. SECTION HEADINGS. The section headings in this Employment
Agreement are for convenience of reference only, and they form no part of this
Agreement and shall not affect its interpretation.
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23. ACKNOWLEDGMENT. The Company hereby agrees to perform its
obligations under the last sentence of Section 5(b) of the 2002 Units Agreement
and Section 23 of the Company Share Option Agreement, and shall use its best
efforts to cause Alexander's to perform its obligations under Section 21, of the
Alexander's Stock Option Agreement.
24. REIT REPRESENTATIONS AND WARRANTY. The Company hereby
represents and warrants to Executive that, if Executive (1) does not (x)
Beneficially Own (as such term is defined in the Amended and Restated
Declaration of Trust of the Company (the "Declaration)), hereafter come to
Beneficially Own, Constructively Own (as such term is defined in the
Declaration) or hereafter come to Constructively Own Common Equity Stock (as
such term is defined in the Declaration) of the Company other than Company Stock
received by Executive pursuant to the terms of the Company Share Option
Agreement, the Convertible Units Agreement, the 2002 Units Agreement or share
options to purchase Company Stock granted to Executive by the Company prior to
the date hereof, as well as Company Stock owned by Executive as of the date
hereof or (y) Beneficially Own (as such term is defined in the Amended and
Restated Certificate of Incorporation of Alexander's, Inc. (the "Certificate"),
hereafter come to Beneficially Own, Constructively Own (as such term is defined
in the Certificate) or hereafter come to Constructively Own Alexander's Stock
other than Alexander's Stock received by Executive pursuant to the terms of the
Alexander's Stock Option Agreement or Beneficially Owned or Constructively Owned
as a result of Executive's receipt of Company Stock under the Company Share
Option Agreement, the Convertible Units Agreement or the 2002 Units Agreement,
(2) complies with the requirements for Existing Constructive Holder status set
forth in the Declaration at all times, if any, that Executive Constructively
Owns in excess of 9.9 percent of the Company's outstanding Common Equity Stock,
and (3) complies with the requirements for Existing Constructive Holder status
set forth in the Certificate at all times, if any, that Executive Constructively
Owns in excess of 9.9 percent of the Alexander's Stock, (a) any and all
issuances or transfers of shares of Company Stock to Executive under the Company
Share Option Agreement, the Convertible Units Agreement or the 2002 Units
Agreement shall not be voided pursuant to the Declaration and shall not result
in (i) the receipt by Executive of shares classified as or exchanged for Excess
Stock (as defined in the Declaration) or (ii) Executive not acquiring
shareholder rights at all times under such shares of the Company Stock to the
fullest extent provided for in the Declaration, the Amended and Restated By-Laws
of the Company and Maryland law, and (b) any and all issuances or transfers of
shares of Alexander's Stock to Executive under the Alexander's Stock Option
Agreement shall not be void under the Certificate and shall not result in (i)
the receipt by Executive of Excess Stock (as defined in the Certificate) or (ii)
Executive not acquiring stockholder rights under such shares of Alexander's
Stock to the fullest extent provided for in the Certificate, the Amended and
Restated By-Laws of Alexander's, Inc., and Delaware law. The representation and
warranty in clause (a) of the preceding sentence is subject to approval by the
Board of an increase in the Ownership Limit (as such term is defined in the
Declaration) with respect to Executive in an amount necessary to cover all of
the shares of Company Stock referred to in clause (1)(x) of the preceding
sentence. The Company will use its best efforts to have such Board approval
adopted as soon as practicable, but in no event later than April 30, 2002.
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25. REMEDY LIMITED TO MONEY DAMAGES. Executive shall not be
entitled to specific performance for a breach of the representation and warranty
contained in paragraph 24 hereof and shall not be entitled to any other remedy
except for an action for money damages.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
VORNADO REALTY TRUST
By: /s/ Steven Roth
---------------------------------
Steven Roth
Chief Executive Officer
/s/ Michael D. Fascitelli
---------------------------------
Michael D. Fascitelli
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