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Exhibit 10.32
TERMINATION AGREEMENT
TERMINATION AGREEMENT, dated as of March 26, 1996, between RPS
Realty Trust, a Massachusetts business trust (the "Trust"), and Joel M.
Pashcow, the Chairman and President of the Trust ("Employee").
R E C I T A L S:
K. The Trust and Employee are parties to an Employment
Agreement dated as of October 24, 1988 (the "Employment Agreement") and such
agreement provides that the Trust intends to engage in the business of mortgage
lending.
L. Under paragraph 3 of the Employment Agreement, upon
the occurrence of a Business Change Event (as defined below), and provided
Employee is at such time employed by the Trust, Employee may, at his option, by
giving written notice to the Trust within 12 months of the occurrence of the
Business Change Event, cause the Term of the Employment Agreement to terminate
two months after such notice. For purposes of this Agreement and the
Employment Agreement, a "Business Change Event" includes a change of the
business carried on by the Trust having the effect that the Trust's business
ceases to be primarily the business of mortgage lending.
M. Pursuant to paragraph 3 of the Employment Agreement,
if Employee elects to terminate his employment with the Trust as a
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result of a Business Change Event, the Trust is obligated to pay Employee a
stated amount based on his average compensation (the "Business Change Event
Payment").
N. In 1991, the Board of Trustees of the Trust
authorized the Trust to make direct and indirect equity investments in real
property. Since such time, the Trust has acquired nine real properties by
means of negotiated transactions with its borrowers or in connection with (or
in lieu of) foreclosure, and has made only one new mortgage loan.
O. In 1993, the Trust announced that it intended to
acquire equity interests in real properties, other than as a result of
negotiated transactions with its borrowers and foreclosure. In connection
therewith, during 1993 and early 1994 the Trust focused on several transactions
which, if consummated, would have resulted in a significant increase in the
Trust's assets invested in real properties, primarily shopping center
properties.
P. In January 1994, the Trust sold its California
mortgage loan portfolio.
Q. In furtherance of the Trust's efforts to focus on
direct equity investments, the Trust entered into a Master Agreement, dated as
of April 10, 1995 (the "Original Master Agreement"), with Ramco-Gershenson,
Inc. and its affiliates named therein (collectively "Ramco") pursuant to which
the Trust agreed
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to acquire through an operating partnership interests in 22 Ramco properties
(the "Ramco Transaction"). Pursuant to the Original Master Agreement, the
Trust agreed that simultaneously with the closing of the Ramco Transaction or
prior thereto, the Trust will dispose of its remaining mortgage loan assets or
contribute such mortgage loan assets to a qualified REIT subsidiary, the stock
of which will be distributed to the Trust's shareholders.
R. As of December 27, 1995, the Trust and Ramco entered
into an Amended and Restated Master Agreement (the "Amended Master Agreement")
pursuant to which the Trust and Ramco agreed on certain amended terms for the
consummation of the Ramco Transaction.
S. The Trust and Employee agree that the closing of the
transaction contemplated by the Amended Master Agreement will constitute a
Business Change Event within the meaning of the Employment Agreement entitling
Employee to terminate the Employment Agreement.
T. The Trust and Employee have agreed to terminate the
Employment Agreement simultaneously with the closing of the transaction
contemplated by the Amended Master Agreement upon the terms and conditions set
forth herein.
NOW, THEREFORE, the parties intending to be legally bound
hereby, agree as follows:
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1. DEFINITIONS. a. All capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in the Employment
Agreement.
b. "Spin-Off Company" means Atlantic Realty Trust, a
Maryland real estate investment trust, that will succeed to ownership of the
Spin-Off Company Assets pursuant to the Ramco Transaction.
c. "Spin-Off Company Assets" means the Trust
mortgage loans and properties listed on Schedule 1 hereto.
2. TERMINATION. Subject to earlier termination as set
forth in the Employment Agreement, Employee shall remain employed as Chairman
and President of the Trust and all provisions of the Employment Agreement shall
remain in full force and effect until the date of consummation (the
"Transaction Date") of the transactions contemplated by the Amended Master
Agreement (the "Ramco Transaction"). Effective upon the Transaction Date, the
Employment Agreement and Employee's employment by the Trust shall, without any
further action on the part of any party, be automatically terminated. From and
after the termination of the Employment Agreement and Employee's employment by
the Trust, neither party to the Employment Agreement shall have any liability,
rights or obligations with respect to such agreement, except that,
notwithstanding such termination, the Trust shall remain obligated to perform
its indemnification obligations under the Employment Agreement.
3. PAYMENTS IN CONNECTION WITH TERMINATION.
a. On the Transaction Date, the Trust shall pay
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Employee all accrued but unpaid salary and bonuses and any unreimbursed
expenses owed to Employee under the Employment Agreement through the
Transaction Date, including without limitation, the Origination Bonus payable
pursuant to paragraph 6 of the Employment Agreement in connection with the
Trust's consummation of the Ramco Transaction. Such amount shall be paid to
Employee in cash by means of certified check or wire transfer.
b. In addition to the amounts payable under
Paragraph 3(b) above and in accordance with the terms of the Employment
Agreement and in consideration of the termination of such agreement and
Employee's employment by the Trust, on the Transaction Date the Trust shall be
obligated to pay Employee an amount equal to $1,910,416 (the "Termination
Payment") in full satisfaction of amounts owed to Employee under the Employment
Agreement, including without limitation, the Business Change Event Payment.
The Termination Payment shall be made as follows: (i) $310,416 on the
Transaction Date in cash by means of certified check or wire transfer and (ii)
$1,600,000 on January 15, 1997 plus interest on such amount at the rate of
7.75% per annum from and after the Transaction Date through and including
January 15, 1997 in cash by means of certified check or wire transfer. In the
event the payment required by this paragraph 3(b) is not made to Employee when
due, the Trust shall make the payment required by this paragraph 3(b) with
interest from the date such payment was due at the rate of 12% per annum.
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c. The amounts payable to Employee pursuant to
paragraph 3(b)(ii) shall be paid by the Trust in all events on or before
January 15, 1997, and such payment shall not be subject to any rights of setoff
or any right to interpose counterclaims or crossclaims.
4. OPTION PLAN. On the date the Ramco Transaction is
consummated, Employee shall surrender and the Trust shall cancel all share
purchase options ("Stock Options") granted to Employee pursuant to the Trust's
1989 Employees' Stock Option Plan. On the date the Ramco Transaction is
consummated, without any further action on the part of the Trust or Employee,
all of the Stock Options shall be terminated, cancelled and have no further
force and effect. Employee hereby agrees to execute, furnish and deliver, at
the expense of the Trust, all such other further documents, instruments and
agreements, as may be reasonably requested by the Trust in order to effect and
evidence more fully the matters covered by this paragraph 4.
5. CONTRIBUTION TO SAVINGS PLAN. The Trust shall make a
pro rata contribution to the Trust's Retirement Savings Plan for Employee's
account for any portion of a year in which the Employment Agreement remains in
effect.
6. CONTINUATION OF MEDICAL COVERAGE. Following the
termination of the Employment Agreement and Employee's employment by the Trust
pursuant to this Agreement and until the later of (i) the date Employee is no
longer an executive officer of the Spin-Off Company and (ii) the date which is
425 days after the Transaction Date, the Trust shall, or it will cause the
Spin-Off Company to,
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provide Employee with comparable medical coverage to the medical coverage
Employee is currently receiving under the Trust's health plan in existence on
the date hereof.
7. ASSIGNMENT OF LIFE INSURANCE POLICY. On the
Transaction Date, the Trust, at the Employee's election, shall assign to
Employee the key man life insurance policy maintained by the Trust on
Employee's life provided that Employee simultaneously reimburses the Trust for
any premiums paid by the Trust on behalf of the Employee which are unearned by
Employee as of such date.
8. EXCHANGE OF RELEASES. Upon termination of the
Employment Agreement and Employee's employment by the Trust pursuant to this
Agreement (i) Employee shall execute and deliver to the Trust a release,
substantially in the form of Exhibit A attached hereto and (ii) the Trust shall
execute and deliver to Employee a release, substantially in the form of Exhibit
B attached hereto.
9. LEGAL FEES. The Trust shall reimburse Employee for
reasonable legal fees (including reasonable disbursements) incurred by Employee
in connection with this Agreement and Employee's tax planning in an amount up
to a maximum of $70,000. The Trust shall make the payment within 10 days after
receipt of reasonably appropriate documentation evidencing the incurrence of
such legal fees.
10. PUBLIC ANNOUNCEMENT. Neither the Trust,on the one
hand, nor Employee on the other hand, shall (and each such party shall use its
reasonable efforts to cause its Affiliates, trustees, officers and employees,
agents and representatives not to), issue
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any press release, make any public announcement or furnish any written
statement to its employees or shareholders generally concerning the events
contemplated by this Agreement without the consent of the other party (which
consent shall not be unreasonably withheld), except to the extent required by
applicable law or the applicable requirements of the New York Stock Exchange,
Inc. (and in either such case such party shall to the extent consistent with
timely compliance with such requirement consult with the other party prior to
making the required release announcement or statement).
11. BOARD OF TRUSTEES. The termination of Employee's
employment by the Trust hereunder shall not impact Employee's status as a
trustee of the Trust.
12. MISCELLANEOUS.
a. Assignment. This Agreement shall be binding
upon and inure to the benefit of Employee and his successors and legal
representatives.
b. Attorney's Fees. In the event Employee shall
refer this Agreement to an attorney in order to enforce the provisions of
paragraph 3(b), the Trust agrees to pay, in addition to all amounts due to
Employee, all costs and expenses incurred in attempting or effecting collection
hereunder, including reasonable attorneys fees, whether or not suit is
instituted. In any action or proceeding brought by a party to enforce any
provision of the Agreement (other than as set forth in paragraph 3(b)), the
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prevailing party shall be entitled to recover the reasonable costs and expenses
incurred by such party in connection with that action or proceeding (including,
but not limited to, attorney fees).
c. Exclusive Agreement; Amendment. This
Agreement supersedes all prior agreements among the parties with respect to its
subject matter, is intended as a complete and exclusive statement of the terms
of the Agreement between the parties with respect thereto and cannot be changed
or terminated except by a written instrument executed by the Trust and
Employee.
d. Termination. The representations,
warranties, covenants and agreements of the parties as set forth in this
Agreement shall automatically terminate in the event (i) the Employment
Agreement is terminated pursuant to its terms on a date which precedes the
termination of the Employment Agreement pursuant to the terms of this Agreement
or (ii) the Transaction Date occurs after December 31, 1996.
e. Additional Parties. In the event the Trust
completes a transaction which involves the transfer of a material portion of
its assets to one or more subsidiaries or controlled affiliates or the
acquisition of a material amount of assets by one or more subsidiaries or
controlled affiliates, the Trust will cause each such subsidiary or affiliate,
except for subsidiaries or other affiliates succeeding to ownership of the
Spin-Off Company Assets or third parties purchasing one or more of the Spin-Off
Company Assets, to assume on a joint and several basis with the Trust and each
other all obligations of the Trust hereunder. In the event the Trust completes
a transfer of a material portion of its assets
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to an unrelated third party, the Trust shall prior to making a distribution to
its shareholders adequately reserve for any remaining labilities under this
Agreement.
f. Jurisdiction. The parties hereto irrevocably
consent to the jurisdiction of the courts of the State of New York and of any
federal court located in such state in connection with any action or proceeding
arising out of or relating to this Agreement. All of the parties hereby
irrevocably consent to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to any of such parties, as
the case may be, to their respective addresses as follows (or to such other
addresses as a party may designate as to himself or itself by notice to the
other party):
(1) If to Employee:
Joel M. Pashcow
21 Fir Drive
Great Neck, New York 11024
(2) If to the Trust:
RPS Realty Trust
747 Third Avenue
New York, New York 10017
g. Governing Law. This Agreement and all
amendments hereof shall be governed by the internal law of the State of New
York, without regard to conflicts of law principles thereof.
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IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above- written.
RPS REALTY TRUST
By: /s/ Stephen R. Blank
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Name:
Title:
/s/ Joel M. Pashcow
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Joel M. Pashcow
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EXHIBIT A
FORM OF RELEASE
Joel M. Pashcow, for himself and on behalf of his heirs,
executors, administrators, successors and assigns (collectively, the
"Releasor"), hereby remises, releases and forever discharges RPS Realty Trust
(the "Trust") and its direct and indirect subsidiaries, shareholders, trustees,
affiliates, predecessors, successors and assigns, and its present and former
trustees, officers, employees, agents, attorneys and its heirs, executors,
administrators, successors and assigns (collectively, the "Releasees"), and
each of them, of and from any and all claims, demands, or causes of action
whatsoever from the beginning of the world to the date present, whether
individual, class or derivative in nature, at law or in equity, whether based
on any federal, state or foreign law or right of action, foreseen or
unforeseen, matured or unmatured, known or unknown, accrued or not accrued,
based on the Employment Agreement dated October 24, 1988 between Releasor and
the Trust (the "Employment Agreement") and Releasor's employment by the Trust
and/or the Trust's predecessors (including Resources Pension Shares 1,
Resources Pension Shares 2, Resources Pension Shares 3 and Integrated Resources
Pension Shares 4) which any Releasor has, had or have or can, shall, or may
hereafter have against the Releasees, or any of them with the exception of (i)
any rights to indemnification under paragraph 13 of the Employment Agreement or
contained in the Trust's Amended and Restated Declaration of Trust, Bylaws, or
otherwise, (ii) any rights under the Termination Agreement dated March 26, 1996
between Releasor and
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the Trust, (iii) any rights as a beneficiary under the Trust's Retirement
Savings Plan and Section 401(k) Plan, or (iv) any rights as a third party
beneficiary of certain provisions of the Amended Master Agreement including,
without limitation, Section 6.8 of the Amended Master Agreement (the "Surviving
Claims").
IN WITNESS WHEREOF, the undersigned has duly executed this
release as of the ____ day of ________, 1996.
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Joel M. Pashcow
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EXHIBIT B
FORM OF RELEASE
RPS Realty Trust (the "Trust"), for itself and on behalf of
its direct and indirect subsidiaries, shareholders, trustees, affiliates
predecessors, successors and assigns, and its present and former trustees,
officers, employees, agents, attorneys and its heirs, executors,
administrators, successors and assigns (collectively, the "Releasor"), hereby
remises, releases and forever discharges Joel M. Pashcow and his heirs,
executors, administrators, successors and assigns (collectively, the
"Releasee"), of and from any and all claims, demands, or causes of action
whatsoever from the beginning of the world to the date present, whether
individual, class or derivative in nature, at law or in equity, whether based
on any federal, state or foreign law or right of action, foreseen or
unforeseen, matured or unmatured, known or unknown, accrued or not accrued,
arising out of or in connection with the Employment Agreement dated October 24,
1988 between Releasee and the Trust (the "Employment Agreement") and Releasee's
employment by the Trust and/or the Trust's predecessors (including Resources
Pension Shares 1, Resources Pension Shares 2, Resources Pension Shares 3 and
Integrated Resources Pension Shares 4) which any Releasor has, had or have or
can, shall, or may hereafter have against the Releasee, or any of them with the
exception of any rights Releasor may have under the Termination Agreement dated
March 28, 1996 between the Trust and Joel M. Pashcow (the "Surviving Claims").
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IN WITNESS WHEREOF, the undersigned has duly executed this
release as of the day of , 1996.
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RPS REALTY TRUST
By:
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Schedule 1
Spin-Off Company Assets
Mortgage Loans
Name of Loan Advance
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1-5 North Wabash Avenue 2,850,000
1733-53 Mass Avenue 2,200,000
Mt. Morris Common Shopping Center 2,700,000
19 Rector Street Office Building 3,255,596
Hylan Plaza Shopping Center 25,000,000
NCR Building 468,493
Branhaven Plaza Shopping Center 2,800,000
Copps Hill Shopping Center 3,563,948
Real Property
Norgate Center, Indianapolis, Indiana
9 North Wabash Avenue, Chicago, Illinois