EXHIBIT 10.22
THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Third
Restated Agreement"), dated as of January 1, 2004, by and between Prentiss
Properties Trust, a Maryland real estate investment trust (the "Company") and
Michael V. Prentiss (the "Executive"), recites and provides as follows:
W I T N E S S E T H:
WHEREAS, the Company is a self-administered Maryland real estate
investment trust, which has been formed to continue and expand the national
acquisition, property management, leasing, development and construction business
of Prentiss Properties Limited, Inc., and its Affiliates (collectively, the
"Prentiss Group");
WHEREAS, the Company's primary objective is to maximize the
profitability of its Properties by continuing the Prentiss Group's success in
renewing leases, maintaining high occupancy rates, reducing operating costs and
growing through the acquisition of additional office and industrial properties
and through development primarily on a build-to-suit basis;
WHEREAS, for over 25 years, Executive has been continuously and
actively engaged in various aspects of real estate development, acquisitions,
and investment management on the national level, both personally and for
companies and joint ventures controlled by or affiliated with Executive,
including, without limitation, the owning, development, asset management and
management of Office or Industrial Properties;
WHEREAS, the Company entered into an Employment Agreement with the
Executive, dated as of October 22, 1996, which was amended and restated as of
May 10, 2000, further amended by a side letter between the Company and the
Executive, dated June 26, 2000 and subsequently amended and restated as the
Second Amended and Restated Employment Agreement dated as of February 14, 2001
(collectively, the "Original Employment Agreement");
WHEREAS, the Company desires to further amend and restate the Original
Employment Agreement in order to, among other things, extend the term and modify
Executive's compensation and benefits;
WHEREAS, the Company desires to continue to employ the Executive to
devote a significant portion of his time to the business of the Company,
including, without limitation, executive management of the Company and the
Properties, and to serve as the Chairman of the Board of Trustees of the
Company; and
WHEREAS, the Executive desires to be so employed on the terms and
subject to the conditions hereinafter stated.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants, promises and
obligations of the parties provided for in this Third Restated Agreement and the
benefits to be received by the Executive, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1
A. DEFINITIONS.
For purposes of this Third Restated Agreement, the following terms
shall have the following meanings (applicable to both the singular and plural
forms of the terms defined):
1. "Acquisition of Office or Industrial Property" means
engaging in the activity of soliciting, seeking to acquire, obtaining an option
or first right of refusal to acquire, or acquiring, any interest in an Office or
Industrial Property or in real property planned for development as an Office or
Industrial Property.
2. "Affiliate" means (i) any person directly or indirectly
controlling, controlled by, or under common control with such other person, (ii)
any executive officer, director, trustee or general partner of such other
person, and (iii) any legal entity for which such person acts as an executive
officer, director, trustee or general partner. The term "person" means and
includes any natural person, corporation, partnership, association, limited
liability company or any other legal entity.
3. "Board" means the Board of Trustees of the Company.
4. "Change in Control" shall mean that (a) the Company has
consummated a transaction pursuant to any agreement with any person or entity
that involves the transfer of ownership of more than fifty percent (50%) of the
Company's total assets or earnings power on a consolidated basis, as reported in
the Company's consolidated financial statements filed with the Securities and
Exchange Commission (including an agreement for the acquisition of the Company
by merger, consolidation, or statutory share exchange regardless of whether the
Company is intended to be the surviving or resulting entity after the merger,
consolidation, or statutory share exchange or for the sale of substantially all
of the Company's assets to the person or entity), (b) as the direct or indirect
result of, or in connection with, a cash tender or exchange offer, a merger or
other business combination or combination of these transactions, the persons who
were trustees of the Company before such transactions cease to constitute a
majority of the Board, or any successor's board, within two years of the last
such transaction, (c) any person or entity is or becomes an Acquiring Person, or
(d) during any period of two consecutive calendar years, the Continuing Trustees
cease for any reason to constitute a majority of the Board. For purposes of the
preceding sentence, "Continuing Trustee" means any member of the Board, while a
member of the Board and (1) who was a member of the Board prior to May 15, 2003
or (2) whose subsequent nomination or election to the Board was recommended or
approved by a majority of the Continuing Trustees; and "Acquiring Person" means
that (i) a person, considered alone or together with all Affiliates and
associates of that person or entity, becomes directly or indirectly the
beneficial owner of securities representing at least twenty percent (20%) of the
Company's outstanding securities entitled to vote generally in the election of
the Board, or (ii) a person or entity enters into an agreement that would result
in that person or entity satisfying the conditions in subsection (i) or that
would result in an Affiliate's failure to be an Affiliate.
5. "Competitive Activity" means engaging in directly, through
an Affiliate, or being employed by any entity undertaking, or otherwise
undertaking to do any of the following: (i) Acquisition of Office or Industrial
Property, (ii) Office or Industrial Property Ownership or Leasing, (iii) Office
or Industrial Property Construction, (iv) Office or Industrial Property
Entitlements, (v) Speculation, or (vi) Office or Industrial Property Management
and Operation.
2
6. "Effective Date" shall mean January 1, 2004.
7. "Employment Term" means the period of five years,
commencing on the Effective Date and continuing until the fifth anniversary of
the Effective Date, unless terminated earlier as provided herein. After the
fifth anniversary of the Effective Date, the Employment Term shall terminate,
unless the parties mutually agree to extend the Employment Term.
8. "Good Reason" shall mean:
(a) the Executive's relocation more than fifty (50)
miles from the Executive's primary office, without such Executive's
consent;
(b) a material adverse alteration in the nature, title
or status of his position;
(c) a reduction by the Company of the Executive's annual
base salary or target bonus;
(d) an assignment of duties to the Executive that are
materially inconsistent with his job description; or
(e) the intentional breach by the Company of any
material provision of this Third Restated Agreement that continues for
a period of 14 days after the Independent Trustees on the Board receive
written notice of such breach.
9. "Independent Trustee" shall mean a member of the Board who
is defined as an "Independent Trustee" in Section 4 of Article V of the Amended
and Restated Declaration of Trust of the Company, dated as of October 16, 1996,
as amended.
10. "Noncompetition Period" means the period beginning on (a)
the date the Executive has terminated his employment without Good Reason
(excluding a resignation for any reason or no reason after a Change in Control)
or (b) the date the Executive experiences a Termination With Cause, and ending
two years from the date of either such termination of employment.
11. "Office or Industrial Property" means any Property in
excess of 20,000 square feet that is used in whole or in part for office or
industrial space or office or industrial related purposes, whether in fee or
leasehold, together with all improvements and fixtures now or hereafter located
thereon, all rights, privileges and easements appurtenant thereto, and all
tangible and intangible personal property used in connection therewith.
12. "Office or Industrial Property Construction" means the
construction, renovation or repair of improvements on an Office or Industrial
Property by Executive or an Affiliate of Executive.
3
13. "Office or Industrial Property Entitlements" means
engaging in the process by which a person with an interest in an Office or
Industrial Property obtains necessary or desirable governmental approvals,
licenses, permits, entitlements or agreements for the commencement of Office or
Industrial Property Construction.
14. "Office or Industrial Property Management and Operation"
means engaging in directly or through an Affiliate, or being employed by any
entity undertaking, or otherwise undertaking the day-to-day management and
operation of an Office or Industrial Property, whether pursuant to a master
lease, management agreement or any other arrangement.
15. "Property" means any real property or any interest
therein.
16. "Speculation" means engaging in the activity of
soliciting, seeking to acquire, obtaining an option or a first right of refusal
to acquire, or acquiring, any interest in a Office or Industrial Property with
the intention at any time of acquiring (or obtaining an option or a first right
of refusal to acquire) or holding an Office or Industrial Property for
subsequent sale or other transfer to any person for purposes of Competitive
Activity.
17. "Termination Without Cause" means the termination of the
Executive's employment by the Company for any reason other than Voluntary
Termination or Termination With Cause.
18. "Termination With Cause" means the termination of the
Executive's employment by act of the Board for any of the following reasons:
(a) willful misconduct of the Executive in connection
with the performance of any of his duties, including, without
limitation, misappropriation of funds or property of the Company or any
of its Affiliates or securing or attempting to secure personally any
profit in connection with any transaction entered into on behalf of the
Company or any of its Affiliates;
(b) conduct by the Executive that would result in
material injury to the reputation of the Company if he were retained in
his position with the Company, including, without limitation,
conviction of a felony under the laws of the United States or any State
thereof, or of an equivalent crime under the laws of any other
jurisdiction, bankruptcy, insolvency or general assignment for the
benefit of his creditors;
(c) continued or deliberate neglect by the Executive of
any of his duties hereunder;
(d) any failure to comply substantially with any written
rules, regulations, policies or procedures of the Company, if such
non-compliance could be expected to have a material and adverse effect
on the Company's business and which has not been cured after reasonable
notice;
(e) any willful failure to comply with the Company's
internal policies regarding insider trading or insider dealing which
has not been cured after reasonable notice; or
4
(f) any material breach of this Third Restated Agreement
which has not been cured after notice and a reasonable opportunity to
be heard.
19. "Voluntary Termination" means the Executive's voluntary
termination of his employment hereunder for any reason other than Good Reason.
B. THE EMPLOYMENT RELATIONSHIP.
1. Employment. The Company shall employ the Executive, and the
Executive agrees to be so employed, in the capacity of Chairman of the Board to
serve for the Employment Term, subject to earlier termination as herein
provided.
2. Services. The Executive shall devote a significant portion
of his business time, attention and effort to the Company's affairs, except for
such reasonable time as shall be required for the Executive to oversee and
manage his horse farm in North Wales, Virginia. Specifically, the Executive
shall: (a) supervise, direct and assist the President and Chief Executive
Officer of the Company; (b) formulate the long-range growth strategy of the
Company, consistent with directions from the Board; (c) review and approve all
proposed real estate acquisitions, dispositions, and new development projects;
and (d) act as a mentor to, and provide leadership and direction to, the
Company's Regional Directors.
3. Compensation.
(a) The Company initially shall pay the Executive for
his services an annual base salary that for 2004 shall be $500,000. The
annual base salary shall be increased $50,000 annually for each of
calendar years 2005 and 2006 and thereafter shall be subject to
discretionary increases to be determined by the Board or the
Compensation Committee established by the Board. Executive's salary
shall be paid in semi-monthly payments.
(b) In addition, the Company shall also pay the
Executive a discretionary annual bonus in an amount to be determined by
the Board or the Compensation Committee established by the Board.
4. Benefits. The Company agrees to provide the Executive with
the following benefits during the Term of this Third Restated Agreement:
(a) Vacation. The Executive shall be entitled each year
to four weeks vacation, during which time his compensation shall be
paid in full.
(b) Employee Benefits. The Executive shall be entitled
to all rights, benefits and privileges to which other management level
employees of the Company are entitled, including, but not limited to,
any retirement, pension, profit-sharing, insurance, hospital or other
plans which may now be in effect or which may hereafter be adopted by
the Company.
5
(c) Tax and Estate Planning. The Company shall provide
the Executive with annual personal tax and estate planning services. In
addition, the Company shall provide the services of an accountant to
keep the Executive's financial records and to assist in tax reporting.
(d) Country Club Fees. The Company shall reimburse the
Executive for his membership dues at the following country clubs:
Brookhollow Golf Club in Dallas, Texas; Robert Trent Jones Golf Club in
Northern Virginia; Preston Trails Club in Dallas, Texas; and Oyster
Harbors Club in Cape Cod, Massachusetts.
(e) Flight Time. The Company shall provide the Executive
with 100 hours per year of flight time on a Challenger (the "Aircraft")
through its fractional ownership with Flex Jets. At the Executive's
discretion, such hours may be used in the performance of his duties
hereunder or for personal use. If the Company owns the interest in the
Aircraft, then the Company shall pay all costs associated with the
Aircraft; provided however, if any of such hours are used for the
Executive's personal use, the Executive shall reimburse the Company at
the variable hourly rate for such usage. If the Executive owns the
interest in the Aircraft, then the Company shall reimburse the
Executive for (i) the interest costs on the loan for the acquisition of
the interest in the Aircraft, (ii) the monthly management fee
associated with the interest in the Aircraft and (iii) the variable
hourly rate for usage of the Aircraft for business purposes. The
parties acknowledge that the current hourly charge for the Aircraft is
$2,390.
5. Expenses. The Company recognizes that the Executive will
have to incur certain out-of-pocket expenses, including, but not limited to,
travel expenses, related to his services and the Company's business, and the
Company agrees to reimburse the Executive for all reasonable expenses
necessarily incurred by him in the performance of his duties upon presentation
of a voucher or documentation indicating the amount and business purposes of any
such expenses.
6. Termination in Case of Death or Disability. In case of the
Executive's death or permanent disability (defined as complete physical or
mental inability, confirmed by a licensed physician, to perform substantially
all of the services described herein that continues for a period of 180
consecutive days), the Company may elect to terminate the Executive pursuant to
the terms of Section B, Paragraph 8 hereof.
7. Termination With Cause; Voluntary Termination. The Company
may terminate this Third Restated Agreement upon a determination that an event
has occurred within the definition of Termination With Cause; provided, however,
in the case of a Termination With Cause based upon clauses (b) or (c) of such
definition, the Company shall provide the Executive written notice of such
grounds for termination, and the Executive shall have a period of 14 days to
cure such cause to the reasonable satisfaction of the Board. If the Executive
shall suffer Termination With Cause or shall cease being an employee of the
Company on account of a Voluntary Termination, then the Executive shall receive
accrued compensation until the effective date of such Voluntary Termination or
Termination without Cause and shall not be entitled to any compensation after
the effective date of such Voluntary Termination or Termination With Cause
(except compensation accrued but unpaid on the date of such event). Any
continued rights and benefits the Executive may have under employee benefit
plans and programs of the Company upon such a termination, if any, shall be
determined in accordance with the terms of such plans and programs provided
however, that the Executive, including his immediate, family shall be able to
6
continue to participate in the Company's medical/health insurance or coverage
program with the same level of benefits as he was entitled to receive
immediately prior to the time of termination, but the Executive shall bear all
costs of such medical/health insurance or coverage. Any period during which
benefits are continued pursuant to this Paragraph 7 of Section B shall be
considered to be in satisfaction of the Company's obligation to provide
"continuation coverage" pursuant to Section 4980B of the Internal Revenue Code
of 1986, as amended, and the period of coverage under Section 4980B shall be
reduced by the period during which benefits are provided pursuant to this
Paragraph 7 of Section B.
8. Death or Disability; Termination Without Cause; or
Termination of Employment by Executive for Good Reason. If the Executive shall
suffer a termination of employment due to death or disability or a Termination
Without Cause or shall terminate his employment for Good Reason, then the
Company: (i) shall pay the Executive, (a) in the case of a termination of
employment due to death or disability, cash compensation in a lump sum equal to
one year's base salary, based on the Executive's base salary at the time of such
death of termination due to disability; or (b) in the case of a Termination
Without Cause or a termination of employment by Executive for Good Reason, cash
compensation in a lump sum equal to the sum of (x) two years' base salary (based
on the Executive's base salary at the time of such Termination Without Cause or
termination by the Executive for Good Reason) and (y) two times the sum of (A)
the average of the annual cash bonuses paid to the Executive with respect to
calendar years 1999 and 2000 and (B) the average of the current value of the
long-term incentives earned with respect to calendar years 1999 and 2000; and
(ii) continue to provide for a period of three years after such death,
disability or termination, at its expense, on behalf of the Executive and his
spouse, dependents and beneficiaries (collectively, "Dependents") (a) annual
physicals, medical, health, dental and prescription drug benefits, (b) long-term
disability coverage, (c) life insurance and other death benefits coverage, and
(d) all the benefits and privileges set forth in subparagraphs (c), (d), and (e)
of Paragraph 4 of Section B, but only to the extent permitted under the terms of
any plan, policy, or program that offers such benefits, coverage and privileges.
For the same three-year period (except in the case of death), the Executive
shall be entitled to retain, at the Company's expense, his current office or a
similar office and a secretary. The coverage and benefits (including
deductibles, costs and contributions by the Executive, if any) provided under
this Paragraph 8 of Section B shall be no less favorable to the Executive and
his Dependents than the most favorable of such coverage and benefits provided
the Executive and his Dependents during the 90-day period immediately prior to
such death, disability or termination. The obligation under this Paragraph 8 of
Section B with respect to the foregoing benefits shall be limited if the
Executive obtains any such benefits pursuant to a subsequent employer's benefit
plans, in which case the Company may reduce or eliminate the coverage and
benefits it is required to provide the Executive hereunder as long as the
aggregate coverage and benefits of the combined benefit plans is no less
favorable to the Executive than the coverage and benefits required to be
provided hereunder. Any continued rights and benefits that the Executive, or the
Executive's estate or other legal representatives, may have under employee
benefit plans and programs of the Company upon such death, disability or
termination shall be determined in accordance with the terms and provisions of
such plans and programs, except as provided in this Paragraph 8. The foregoing
notwithstanding, if the Executive has received, or is entitled to receive, the
payments under Paragraph 9 of Section B, no payments or benefits shall be
payable under this Paragraph 8. Any period during which benefits are continued
pursuant to this Paragraph 8 of Section B shall be considered to be in
satisfaction of the Company's obligation to provide "continuation coverage"
pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended, and
the period of coverage under Section 4980B shall be reduced by the period during
which benefits are provided pursuant to this Paragraph 8 of Section B.
7
9. Change in Control. Within fifteen (15) days of a Change in
Control, the Company shall pay Executive a lump sum payment of $3,500,000 if a
Change in Control occurs in 2004. If a Change in Control occurs in any year
after 2004, the lump sum payment shall be $3,000,000. In addition, after a
Change in Control, the Executive may resign for any reason or no reason, and the
Company shall continue to provide for a period of three years after such
resignation, at its expense, on behalf of the Executive and his Dependents (i)
annual physicals, medical, health, dental and prescription drug benefits, (ii)
longterm disability coverage, (iii) life insurance and other death benefits
coverage, and (iv) all the benefits and privileges set forth in subparagraphs
(c), (d), and (e) of Paragraph 4 of Section B, but only to the extent permitted
under the terms of any plan, policy, or program that offers such benefits,
coverage and privileges. For the same three-year period (except in the case of
death), the Executive shall be entitled to retain, at the Company's expense, his
current office or a similar office and a secretary. The coverage and benefits
(including deductibles, costs and contributions by the Executive, if any)
provided under this Paragraph 9 of Section B shall be no less favorable to the
Executive and his Dependents than the most favorable of such coverage and
benefits provided the Executive and his Dependents during the 90-day period
immediately prior to the Change in Control or as of any date following the
Change in Control but preceding the Executive's resignation. The obligation
under this Paragraph 9 of Section B with respect to the foregoing benefits shall
be limited if the Executive obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may reduce or eliminate the
coverage and benefits it is required to provide the Executive hereunder as long
as the aggregate coverage and benefits of the combined benefit plans is no less
favorable to the Executive than the coverage and benefits required to be
provided hereunder. Any period during which benefits are continued pursuant to
this Paragraph 9 of Section B shall be considered to be in satisfaction of the
Company's obligation to provide "continuation coverage" pursuant to Section
4980B of the Internal Revenue Code of 1986, as amended, and the period of
coverage under Section 4980B shall be reduced by the period during which
benefits are provided pursuant to this Paragraph 9 of Section B.
10. Termination after Five Years. Upon a termination of
employment due to the expiration of the Employment Term on the fifth anniversary
of the Effective Date, the Company shall continue to provide at its expense,
from the period that begins on the fifth anniversary of the Effective Date and
ends on the Executive's sixty-eighth (68th) birthday, on behalf of the Executive
and his Dependents (a) annual physicals, medical, health, dental and
prescription drug benefits, (b) long-term disability coverage, (c) life
insurance and other death benefits coverage, and (d) all the benefits and
privileges set forth in subparagraphs (c), (d), and (e) of Paragraph 4 of
Section B, but only to the extent permitted under the terms of any plan, policy,
or program that offers such benefits, coverage and privileges. For the same
period, the Executive shall be entitled to retain, at the Company's expense, his
current office or a similar office and a secretary. The coverage and benefits
(including deductibles, costs and contributions by the Executive, if any)
provided under this Paragraph 10 of Section B shall be no less favorable to the
Executive and his Dependents than the most favorable of such coverage and
benefits provided the Executive and his Dependents during the 90-day period
immediately prior to expiration of the Employment Term. The obligation under
this Paragraph 10 of Section B with respect to the foregoing benefits shall be
8
limited if the Executive obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may reduce or eliminate the
coverage and benefits it is required to provide the Executive hereunder as long
as the aggregate coverage and benefits of the combined benefit plans is no less
favorable to the Executive than the coverage and benefits required to be
provided hereunder. Any continued rights and benefits that the Executive, or the
Executive's estate or other legal representatives, may have under employee
benefit plans and programs of the Company upon the expiration of the Employment
Term shall be determined in accordance with the terms and provisions of such
plans and programs, except as provided in this Paragraph 10. Any period during
which benefits are continued pursuant to this Paragraph 10 of Section B shall be
considered to be in satisfaction of the Company's obligation to provide
"continuation coverage" pursuant to Section 4980B of the Internal Revenue Code
of 1986, as amended, and the period of coverage under Section 4980B shall be
reduced by the period during which benefits are provided pursuant to this
Paragraph 10 of Section B.
11. Gross-Up Payment.
(a) In the event it shall be determined that any payment
or distribution of any type to or for the benefit of the Executive, by
the Company, any Affiliate, any person who acquires ownership or
effective control of the Company or ownership of a substantial portion
of the Company's assets (within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations thereunder) or any Affiliate of such person, whether paid
or payable or distributed or distributable pursuant to any of the terms
of this Third Restated Agreement or otherwise (the "Total Payments"),
is or will be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
collectively referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes), including any income tax, employment tax or Excise Tax, imposed
upon the Gross Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total
Payments.
(b) All mathematical determinations, and all
determinations as to whether any of the Total Payments are "parachute
payments" (within the meaning of Section 280G of the Code), that are
required to be made under this subparagraph (b), including
determinations as to whether a Gross-Up Payment is required, the amount
of such Gross-Up Payment and amounts relevant to the last sentence of
this subparagraph (b), shall be made by an independent accounting firm
selected by the Executive from among the five (5) largest accounting
firms in the United States (the "Accounting Firm"), which shall provide
its determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment
and any other relevant matter, both to the Company and the Executive by
no later than ten (10) days following the Change in Control, or such
earlier time as is requested by the Company or the Executive (if the
Executive reasonably believes that any of the Total Payments may be
subject to the Excise Tax). If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive
and the Company with a written statement that such Accounting Firm has
concluded that no Excise Tax is payable (including the reasons
therefor) and that the Executive has substantial authority not to
9
report any Excise Tax on his federal income tax return. If a Gross-Up
Payment is determined to be payable, it shall be paid to the Executive
within twenty (20) days after the Determination (and all accompanying
calculations and other material supporting the Determination) is
delivered to the Company by the Accounting Firm. Any determination by
the Accounting Firm shall be binding upon the Company and the
Executive, absent manifest error. As a result of uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments not made by the Company should have been made
("Underpayment"), or that Gross-Up Payments will have been made by the
Company which should not have been made ("Overpayments"). In either
such event, the Accounting Firm shall determine the amount of the
Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive. In the case of an
Overpayment, the Executive shall, at the direction and expense of the
Company, take such steps as are reasonably necessary (including the
filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Company, and
otherwise reasonably cooperate with the Company to correct such
Overpayment, provided, however, that (i) the Executive shall not in any
event be obligated to return to the Company an amount greater than the
net after-tax portion of the Overpayment that he has retained or has
recovered as a refund from the applicable taxing authorities and (ii)
this provision shall be interpreted in a manner consistent with the
intent of this Paragraph 11 of Section B, which is to make the
Executive whole, on an after-tax basis, from the application of the
Excise Tax, it being understood that the correction of an Overpayment
may result in the Executive repaying to the Company an amount which is
less than the Overpayment.
C. AGREEMENT NOT TO COMPETE.
Except as explicitly provided herein, the Executive agrees, for the
entire Employment Term and, if applicable, the entire Noncompetition Period, to
the following covenants, effective within the United States:
1. Competitive Activity Restriction. Executive, personally or
through any Affiliate of Executive, shall not conduct any Competitive Activity
other than through the Company, unless a majority of the Board, which majority
must include a majority of the Independent Trustees, have determined that such
Competitive Activity will not have a material adverse effect on the operations
of any Office or Industrial Property that the Company either owns or has a right
to acquire. Notwithstanding any other provision of this Third Restated
Agreement, the Executive agrees that, during the time he is employed by the
Company, the Executive shall present to the Company all opportunities that arise
to engage in Competitive Activities.
10
2. No Beneficial Ownership. Executive shall not beneficially
own directly or indirectly any beneficial interest in any entity engaged in any
Competitive Activity other than the Company, except for (i) any interest in a
company traded on a nationally recognized public securities exchange (including
The NASDAQ National Market), provided such interest does not exceed five percent
of the outstanding capital stock of such company, and (ii) the Executive's 6%
limited partnership interest in the Chesapeake & Potomac Telephone Building in
Baltimore Maryland.
3. Loans. Executive shall not directly or indirectly make any
loan to, or hold any note evidencing a loan from, any entity engaged in any
Competitive Activity.
4. Competitive Entity. Executive shall not be a director or
trustee, officer, or employee of, or consultant to (whether for compensation or
not) any entity engaged in any Competitive Activity.
5. Notification to Independent Trustees. If Executive or any
Affiliate of Executive desires to engage in any Competitive Activity, Executive
shall describe fully the proposed activity in a written notice (the "Disclosure
Notice") to the Company and the Independent Trustees. A Disclosure Notice shall
only pertain to a specific proposed project and the referenced proposed project
shall be described therein with specificity as to timing, location, scope and
the extent of Executive's involvement, financially and in terms of his time
commitment. A Disclosure Notice may not request approval for any conceptual or
non-project specific activity or for any activity that is prohibited by this
Third Restated Agreement.
D. MISCELLANEOUS PROVISIONS.
1. Notices. All notices or deliveries authorized or required
pursuant to this Agreement shall be deemed to have been given when in writing
and when (i) deposited in the U.S. mail, certified, return receipt requested,
postage prepaid, or (ii) otherwise delivered by hand or by overnight delivery,
against written receipt, by a common carrier or commercial courier or delivery
service addressed to the parties at the following addresses or to such other
addresses as either may designate in writing to the other party:
To the Company: Prentiss Properties Trust
3890 West Northwest Highway, Suite 400
Dallas, Texas 75220
Phone (214) 761-1440
To the Executive: Michael V. Prentiss
5006 Seneca Drive
Dallas, Texas 75209
214-350-3011
2. Entire Agreement. This Third Restated Agreement contains
the entire understanding between the parties hereto with respect to the subject
matter hereof and shall not be modified in any manner except by instrument in
writing signed, by or on behalf of, the parties hereto. This Third Restated
Agreement shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the parties hereto.
11
3. Effective Date. Notwithstanding the date of this Third
Restated Agreement, the terms and provisions of and rights and obligations under
this Third Restated Agreement shall become effective on the Effective Date.
4. Applicable Law. This Third Restated Agreement shall be
governed and construed in accordance with the laws of the State of Texas.
5. Assignment. The Executive acknowledges that his services
are unique and personal. The Executive may not assign his rights or delegate his
duties or obligations under this Third Restated Agreement except (a) his rights
to compensation and benefits hereunder may be transferred by will or operation
of law and (b) his rights under employee benefit plans or programs described in
Section B, Paragraph 4(b) may be assigned or transferred in accordance with the
terms of such plans or programs, or regular practices thereunder. The
Executive's rights and obligations under this Third Restated Agreement shall
inure to the benefit of and shall be binding upon the Executive's heirs and
personal representatives.
6. Titles and Headings. Titles and headings to sections and
paragraphs in this Third Restated Agreement are inserted for the convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Third Restated Agreement.
7. Counterparts. This Third Restated Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
8. Amendments. No amendment, modification or supplement to
this Third Restated Agreement shall be binding on any of the parties hereto
unless it is in writing and signed by the parties in interest at the time of the
modification, and further provided any such modification is approved by a
majority of the Independent Trustees.
9. No Third-Party Beneficiaries. This Third Restated Agreement
is solely for the benefit of the parties to this Third Restated Agreement and
should not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claims or action or other right in excess of those existing
without reference to this Third Restated Agreement.
10. Maximum Legal Enforceability; Time of Essence. Any
provision of this Third Restated Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. Without prejudice to any rights or remedies otherwise available to
any party to this Third Restated Agreement, each party hereto acknowledges that
damages would not be an adequate remedy for any breach of the provisions of this
Third Restated Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable. Time shall be of the essence as to
each and every provision of this Third Restated Agreement.
12
11. Specific Performance. The Executive acknowledges that the
obligations undertaken by him pursuant to this Third Restated Agreement are
unique and that the Company will not have an adequate remedy at law if he shall
fail to perform any of his obligations hereunder, and the Executive therefore
confirms that the Company's right to specific performance of the terms of this
Third Restated Agreement is essential to protect the rights, interest and
goodwill of the Company. Accordingly, in addition to any other remedies that the
Company may have at law or in equity, the Company shall have the right to have
all obligations, covenants, agreements and other provisions of this Third
Restated Agreement specifically performed by the Executive, and the Company
shall have the right to obtain preliminary and permanent injunctive relief to
secure specific performance and to prevent a breach or contemplated breach of
this Third Restated Agreement by the Executive. The Executive acknowledges that
the Company will have the right to have the provisions of this Third Restated
Agreement enforced in any court of competent jurisdiction, it being agreed that
any breach or threatened breach of this Third Restated Agreement would cause
irreparable injury to the Company and its business and that money damages would
not provide an adequate remedy to the Company.
12. Operations of Affiliated Parties. The Executive agrees
that he will refrain from authorizing any Affiliate to perform any activities
that would be prohibited by the terms of this Third Restated Agreement if they
were performed by him. Notwithstanding anything to the contrary contained in
this Third Restated Agreement, the Executive shall not be required by the terms
of this Third Restated Agreement to violate any fiduciary duty existing on the
date hereof that he owes to a third party.
13. Further Assurances. The parties to this Third Restated
Agreement will execute and deliver or cause the execution and delivery of such
further instruments and documents and will take such other actions as any other
party to the Third Restated Agreement may reasonably request in order to
effectuate the purpose of this Third Restated Agreement and to carry out the
terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Third Restated
Agreement to be duly executed as of the day and year first written above.
THE EXECUTIVE
/s/ Michael V. Prentiss
____________________________________
MICHAEL V. PRENTISS
THE COMPANY
PRENTISS PROPERTIES TRUST
By: /s/ Lawrence A. Wilson
________________________________
LAWRENCE A. WILSON
Its: Chairman Compensation
Committee for the Board of
Directors
13