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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 15th day of April, 1997, by and among Vornado Realty Trust, a Maryland
real estate investment trust (the "Company"), The Mendik Company, L.P., a
Delaware limited partnership (which intends to change its name to Vornado Realty
L.P.) (the "Operating Partnership"), and David R. Greenbaum (the "Executive").
WHEREAS, the Company serves as general partner of the Operating
Partnership and, through the Operating Partnership, is engaged in, among other
things, the acquisition, ownership, management, leasing, renovation and
redevelopment of commercial real estate in the United States;
WHEREAS, the Company, within the Company and through the Operating
Partnership, has formed the Mendik Division, which is engaged in the
acquisition, ownership, management, leasing, renovation and redevelopment of the
Company's office properties in Manhattan;
WHEREAS, the Company believes that it would benefit from the
application of Executive's particular and unique skill, experience, and
background to the management and operation of the Company, and wishes to employ
Executive as President of the Mendik Division of the Company and, as such,
manage the Mendik Division of the Operating Partnership on behalf of the Company
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(collectively the "Mendik Division" unless otherwise specifically indicated);
and
WHEREAS, the parties desire by this Agreement to set forth the terms
and conditions of the employment relationship between the Company and Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein set forth, and for other good and valuable consideration, the
Company, the Operating Partnership and Executive agree as follows:
1. Employment and Duties. The Company hereby hires Executive, and
Executive hereby agrees to be employed, as President of the Mendik Division of
the Company on the terms and conditions provided in this Agreement. If
reasonably requested by the Board of Trustees of the Company (the "Board"),
Executive shall also serve on the Board of Directors of subsidiaries of the
Company which are treated as part of the Mendik Division or as a senior officer
of such subsidiaries without additional compensation. Executive shall perform
the duties and responsibilities and have the authority commensurate with the
position of President in entities similar to the Mendik Division and shall
perform such other duties and responsibilities and have such additional
authority with regard to the Mendik Division, and incidental thereto with regard
to the Company, as may be prescribed by the Chief Executive Officer of the
Mendik Division, the Chief Executive Officer of the Company or the President of
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the Company, provided that such other duties and responsibilities, and such
additional authority shall be consistent with his position as President of the
Mendik Division and further provided that any additional duties,
responsibilities and authority outside of the Mendik Division, or more than
incidental thereto with regard to the Company, shall be mutually agreed upon.
The duties and responsibilities of the Executive shall include, and Executive
(together with, in coordination with and subject to, the Chief Executive Officer
of the Mendik Division of the Company) shall have, full authority to conduct,
operate, and manage the business of the Mendik Division in a manner promoting
the best interests of the Company and its shareholders and the Mendik Division
of the Operating Company on behalf of the Company as general partner, in
accordance with the partnership agreement forming the Operating Partnership,
including the authority to execute contracts, hire, determine the compensation
of and discharge employees, and run all of the business affairs of the Mendik
Division within the scope of the business plan approved by the Board and/or the
Chief Executive Officer or President of the Company, but subject to the right of
the Company to require the specific approval of the Board, the Chief Executive
Officer of the Company or President of the Company with respect to entering into
material financing or property transactions. Executive shall cause to be
established reasonable operating procedures within the Mendik Division,
reasonably acceptable to the President of the Company, that will result in the
Executive being notified by the employees of the
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Mendik Division of potentially conflicting lease negotiations among buildings
(i.e., buildings owned by the entities listed in Exhibit A and office buildings
in which the Company has an ownership or management interest, which may include
buildings owned by the entities listed in Exhibit A). Executive shall notify the
President of the Company of material potentially conflicting negotiations and
the President shall have the right to assume responsibility (directly or through
his designee) for negotiations of buildings owned by the Company in such
situations. Executive shall report to the Board, the Chief Executive Officer of
the Mendik Division and the Chief Executive Officer and President of the
Company. Executive shall devote substantially all of his working time and
attention during normal business hours (other than absence due to illness or
vacation) to the performance of his duties for the Company, subject to the other
provisions of this Section 1. Notwithstanding the foregoing, 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 5 hereof, to (a) serve as an officer, employee, trustee, director and/or
general partner of any entity (or any successor thereto) that currently owns,
directly or indirectly, any property or entity listed in Exhibit A attached
hereto, provided that, for each such entity, Executive's activities are
primarily related to such properties, (b) conduct any activity permitted by
Section 5(a) hereof, (c) participate in any other business activities approved
in advance by the Board, (d) engage in
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charitable, civic, fraternal, or trade group activities, or (e) otherwise manage
his and his family's personal, financial or legal affairs, including but not
limited to Building Maintenance Service LLC and interests of MIL Equities LLC
and similar family interests. Executive's duties shall include the delivery of
periodic certifications to the Company with respect to the effect of the Mendik
Division's activities on the Company's status as a real estate investment trust
for Federal income tax purposes. As a condition to Executive's entering into
this Agreement, the Company, the Operating Company and Executive are entering
into, or have previously entered into, an indemnification agreement hereof in
the form attached hereto as Exhibit B (the "Indemnification Agreement").
2. Compensation and Benefits. As compensation for performing the
services required by this Agreement, Executive shall be entitled to receive the
following compensation and benefits during the Employment Term:
2(a) Base Compensation. The Company shall pay to Executive an
aggregate annual salary ("Base Compensation") at a rate of $300,000 per annum,
payable in accordance with the Company's general policies and procedures for
payment of salaries to their executive personnel, but in no event less
frequently than monthly. Increases in Base Compensation, if any, shall be
determined by the compensation committee of the Board based on periodic reviews
of Executive's performance conducted no less frequently than annually. If
Executive's Base Compensation is
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increased by the Company, such increased compensation shall then constitute the
Base Compensation for all purposes of this Agreement. Executive's Base
Compensation shall not be reduced during the term of this Agreement.
2(b) Incentive Compensation. In addition to Base Compensation,
Executive shall be entitled to participate, at a level commensurate with his
position, in any equity and/or incentive compensation programs in effect with
respect to senior executive officers of the Company (other than any plans or
arrangements provided solely for the Chief Executive Officer of the Company, the
President of the Company, any other officer of the Company on an individual
basis because of special circumstances, any individual(s) who become employed by
the Company pursuant to an acquisition (with regard to levels of programs or
arrangements committed to at such time), or to any individual(s) pursuant to an
agreement for a new hire (with regard to levels of programs or arrangements
committed to at such time)). In determining whether the amount of any future
share options or restricted share grants are in compliance with the prior
sentence, any share option grant made by the Company to Executive prior to or on
the date hereof, including those covered by the grants reflected in Exhibit C
hereto shall not be considered. Exhibit C hereto contain the grants of stock
options heretofore made to Executive.
2(c) Executive Benefits. During the term of this Agreement,
Executive shall have the right to participate in any
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retirement, pension, insurance, health, or other benefit plan or program, fringe
benefit or other perquisite that generally is provided by the Company for other
senior executive officers of the Company (which shall not include plans,
programs, benefits or perquisites provided specifically for the benefit of the
Chief Executive Officer of the Company, the President of the Company, any other
officer of the Company on an individual basis because of special circumstances,
any individual(s) who become employed by the Company pursuant to an acquisition
(with regard to levels of programs or arrangements committed to at such time),
or to any individual(s) pursuant to an agreement for a new hire (with regard to
levels of programs or arrangements committed to at such time)). Without limiting
the foregoing, Executive shall be entitled to tax preparation and financial
planning assistance up to a maximum of $15,000 per calendar year, upon approval
by an insurance carrier, a $ 3 million five-year renewable term life insurance
policy and a long-term disability insurance coverage with benefits at a rate of
60% of Base Salary through age 65 and a criteria of comparable position and no
longer than a 180-day waiting period, which disability benefits would be
inclusive of any disability benefits paid under any group long-term disability
plan of the Company and noncontributory wrap-around medical and dental coverage
substantially similar to that which he now has.
2(d) Vacation and Leaves of Absence. Executive shall be
entitled to the normal and customary amount of paid vacation provided to the
Company's senior executives, but in no
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event less than four (4) weeks annually, beginning on the date hereof. In
addition, Executive shall be entitled to the same sick leave and holidays
provided to other executive employees of the Company.
2(e) Expenses. Executive shall be entitled to receive
reimbursement for all reasonable and necessary travel and other expenses
incurred by him in connection with the performance of business-related duties
for the Company, upon the presentation of reasonably itemized statements of such
expenses in accordance with the Company's policies and procedures.
2(f) Services. The Company shall furnish Executive with office
space, stenographic and secretarial assistance and such other facilities and
services comparable to those which he now has. The Executive shall be initially
located at his current offices, which shall be the corporate offices of the
Mendik Division.
2(g) Company Loans. During the Employment Term, upon the
written request of Executive, the Company shall disburse to Executive (i) at any
time, one or more loans in an aggregate principal amount of up to $5,000,000,
(ii) following April 30, 1998, one or more loans in an aggregate principal
amount of up to $2,500,000 and (iii) following April 30, 1999, one or more loans
in an aggregate principal amount of up to $2,500,000, for a potential aggregate
loan amount of up to $10,000,000, which at the time any loan is taken shall not
individually, or in the
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aggregate with then outstanding loans, exceed one-third (1/3) of the value of
the Units (based on the value of the Common Shares of the Company). Each of such
loans shall be on a revolving principal basis subject to the following terms and
conditions: (i) each loan must be in an amount of at least $500,000; (ii) each
loan shall be fully recourse to Executive and shall be fully secured by a pledge
of all or a portion of his units of partnership interest in the Operating
Partnership ("Units"); (iii) each loan shall be subject to interest at the
applicable Federal rate under Section 1274(d) of the Internal Revenue Code of
1986, as amended (the "Code"), on the date the loan is made; (iv) the interest
on each loan shall be paid quarterly as set forth in the agreements evidencing
such loans (the intent of which will be to approximate the timing of the
quarterly distributions on the Units) and the quarterly distributions made
pursuant to the Units shall be applied by the Company to the extent necessary to
satisfy the next following quarterly interest payment as of the date of such
quarterly distribution, and Executive shall pay any remaining interest owed on
the loan, if any, after such application of the distributions; and (v) the
principal amount of each loan will be due and payable upon the first to occur of
(A) thirty (30) days after a termination of employment by the Company or by the
Executive for any reason (other than for Cause), (B) a termination of employment
for Cause, (C) the end of the Employment Term upon a failure to extend the
Employment Term, or (D) the fifth anniversary of the date the loan is made;
provided, that if the aggregate principal
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amount of outstanding loans ever exceeds fifty percent (50%) of the value of the
Units (based on the value of Common Shares of the Company), such excess shall be
due and payable within sixty (60) days thereafter. Executive shall not be
required to pledge or otherwise hypothecate or encumber any of Executive's
personal assets in connection with any loan other than the Units as described
above. The payment of the value of the Units upon redemption shall be offset by
any due and payable loan amounts under this Section 2(g), and the Company may
require in the loan documents that, if a loan becomes due and payable (other
than as a result of exceeding the fifty percent (50%) limit) and is not paid
within ninety (90) days of such due date, Executive agrees, if requested by the
Company, to promptly redeem adequate Units to repay such loan and to promptly
provide proceeds of such redemption to the Company in repayment of such loan.
The agreements evidencing each loan shall contain such additional terms and
conditions as are reasonably acceptable to the Executive in good faith.
3. Term. The term of employment under this Agreement (the "Employment
Term") shall commence on the date hereof (the "Commencement Date") and shall
continue through April 30, 2000; provided, that, the Employment Term shall
automatically be extended commencing on April 30, 2000 for successive additional
one (1) year periods unless either party gives written notice not to extend the
Employment Term not less than ninety (90) days prior to the then next upcoming
expiration date. The Employment
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Term may be sooner terminated by either party in accordance with Section 4 of
this Agreement.
4. Termination and Termination Benefits. The termination of Executive's
employment during the Employment Term by Executive or the Company shall not be
treated as a breach of this Agreement.
4(a) Termination by the Company Without Cause. The Company may
terminate the Employment Term and Executive's employment hereunder without
"Cause" upon written notice to Executive. For purposes of this Section 4(a), a
termination of the Employment Term by the Company without Cause shall include
any termination or nonextension by the Company pursuant to a written notice
under Section 3 above (other than a termination for Cause as defined in Section
4(b) below).
4(b) Termination by the Company for Cause. Subject to the
following paragraph, the Company may terminate the Employment Term and
Executive's employment hereunder for "Cause" upon written notice to Executive.
For purposes of this Section 4(b), a termination for Cause shall only mean a
termination as a result of (i) Executive's willful misconduct with regard to the
Company or its subsidiaries (within the meaning of Section 424(f) of the Code (a
"Subsidiary") that is materially economically injurious to the Company or to the
Mendik Division, provided that in no event will willful misconduct include the
exceptions to noncompetition set forth in Section 5(a) hereof (but, the
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foregoing proviso does not permit Executive's willful misconduct that is beyond
the scope of what is reasonably necessary to satisfy or perform the Section 5(a)
exceptions), (ii) Executive's conviction of, or plea of guilty or nolo
contendere to, a felony (other than a traffic violation), (iii) Executive's
willful and continued failure to use reasonable business efforts to attempt to
substantially perform his duties hereunder (other than such failure resulting
from Executive's incapacity due to a 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 business efforts to attempt to substantially perform his
duties or (iv) Executive's willful breach of Section 5 hereof that is materially
economically injurious either to the Company or the Mendik Division.
For purposes of this Section 4(b), in addition to the other legal
requirements to be "willful," 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. In
addition, no action or inaction shall give rise to a right of the Company to
terminate this Agreement and Executive's employment hereunder for Cause pursuant
to the preceding paragraph unless and until the Company has delivered to
Executive a copy of a
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resolution duly adopted by a majority of the Board (excluding Executive, if he
is a member of the Board) 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 any conduct set forth in the preceding paragraph and
specifying the particulars thereof in detail. This Section 4(b) 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.
4(c) Termination by the Company Due to Disability. If, due to
illness, physical or mental disability, or other incapacity, Executive is
substantially unable, for one hundred and eighty (180) consecutive days, to
perform his duties hereunder, the Company may terminate the Employment Term and
his Employment hereunder upon at least thirty (30) days' prior written notice to
Executive given after the one hundred eighty (180) days, and provided the
Executive does not return to the substantial performance of his duties on a
full-time basis within such thirty (30) day period.
4(d) Termination by Executive With Good Reason. Subject to the
following paragraph, Executive may terminate the Employment Term and his
employment hereunder for "Good Reason"
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upon written notice to the Company. For purposes of this Section 4(d), a
termination for Good Reason shall mean a termination as a result of (unless
otherwise consented to in writing by Executive) (i) the failure to appoint
Executive to the positions set forth in Section 1, the assignment to Executive,
without his consent, of more than incidental duties outside of the Mendik
Division, the alteration of the duties, responsibilities and authority of
Executive as set forth in Section 1 in a manner that is materially and adversely
inconsistent with such duties, responsibilities or authority or a change to
Executive's position or title; (ii) a failure by the Company to pay when due any
amounts due under Section 2 hereof or any other earned and due compensation to
Executive or to substantially provide any benefit set forth in Section 2; (iii)
the relocation of the Mendik Division's principal executive offices to a
location other than Manhattan, New York City or relocation of Executive's own
office location from that of the principal offices; (iv) any purported
termination of Executive's employment for Cause which is not effected pursuant
to the procedures of Section 4(b) (and for purposes of this Agreement, no such
purported termination shall be effective); (v) the Company's material breach of
any material term contained in this Agreement or the grant set forth in Exhibit
C or to provide, in all material respects, the indemnification set forth in the
Indemnification Agreement; (vi) the performance, directly or indirectly, of
management, leasing, redevelopment or similar services with respect to any
commercial office property in Manhattan in which the Company has a direct or
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indirect interest, other than through the Mendik Division (except that the
foregoing shall not apply to properties currently owned or hereafter acquired by
the Company where there is a preexisting management or leasing agreement in
place, provided that the Mendik Division shall have general oversight over such
management or leasing operations on behalf of the Operating Partnership); (vii)
a Change in Control (as defined below); (viii) a material breach by the Company
or its Subsidiaries of the Master Property Services Agreement (wholly owned
properties) dated as of the same date hereof or the Master Property Services
Agreement (partially owned properties) dated as of the same date hereof or any
of the service agreements contemplated by either such agreement (the "Cleaning
Agreements"); (ix) if Bernard H. Mendik ("Mr. Mendik") is not the Chief
Executive Officer or Chairman of the Mendik Division of the Company, the
appointment of an individual other than Executive as either Chief Executive
Officer or Chairman of the Mendik Division of the Company, as the case may be,
other than an appointment for the period which Executive is unable to perform
due to physical or mental illness or Executive's termination for Cause; (x) any
requirement that Executive report to anyone other than the Board, the President
of the Company, the Chief Executive Officer of the Company or the Chief
Executive Officer of the Mendik Division; or (xi) the removal or failure to
elect Mr. Mendik as a director of the Company at any time prior to April 30,
2003, other than as a result of Mr. Mendik's (A) consent to such action, (B)
termination that would be a termination for Disability or for Cause within the
meaning of Mr.
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Mendik's Noncompetition Agreement with the Company, (C) total and permanent
disability in a manner that would prevent him from functioning as a director,
(D) death or (E) voluntary retirement; provided that if simultaneously with such
removal, Executive is elected to the Board, a Good Reason event shall not be
deemed to have occurred unless Executive is subsequently removed as a director
of the Company at any time prior to April 30, 2003, other than as a result of
Executive's (A) consent to such action, (B) physical or mental illness, (C)
action or inaction which would constitute Cause within the meaning of Section
4(b) hereof, (D) death or (E) voluntary retirement. Executive's right to
terminate his employment hereunder for Good Reason shall not be affected by his
incapacity due to physical or mental illness.
For purposes of this Section 4(d), no action or inaction shall give
rise to the right of Executive to terminate the Employment Term and Executive's
employment hereunder for Good Reason unless a written notice is given by
Executive to the Company within one hundred twenty (120) days after Executive
has actual knowledge of the occurrence of the event giving rise to Executive's
right to terminate pursuant to this Section 4(d), and such event has not been
cured within thirty (30) days after such notice. Executive's continued
employment during the one hundred and twenty (120) day period referred to above
in this Section 4(d) shall not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good Reason hereunder.
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For purposes of this Section 4(d), "Change in Control" shall mean the
occurrence of any one of the following:
(i) 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.
(ii) 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"),
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provided, however, that an event described in this paragraph (ii) shall not be
deemed to be a Change in Control if any of the 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 (iii)), (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 owns a majority of the Company Voting Securities beneficially owned
by such group (the persons in (i), (ii) and (iii) shall be individually and
collectively referred to herein as, "Interstate Holders");
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(iii) the consummation of a merger, consolidation, share
exchange or similar form of transaction involving the Company or any of its
Subsidiaries, or the sale or other disposition of all or substantially all of
the Company's assets or the assets of the Mendik Division of the Operating
Partnership (a "Business Transaction"), unless immediately following such
Business Transaction (y) more than fifty percent (50%) of the total voting power
of the entity resulting from such Business Transaction or the entity acquiring
the Company's assets or the assets of the Mendik Division of the Operating
Partnership 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
(z) no person (other than the persons set forth in clauses (A), (B), (C), or (F)
of paragraph (ii) 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
(iv) 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
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interests immediately prior to such liquidation and such ongoing entity assumes
all existing obligations of the Company under this Agreement, any Cleaning
Agreement, the Indemnification Agreement and any equity grant.
4(e) Termination by Executive Other Than Pursuant to Section
4(d). Executive may terminate this Agreement and Executive's employment
hereunder at any time for any reason upon ninety (90) days' prior written notice
to the Company.
4(f) Death Benefit. Notwithstanding any other provision of
this Agreement, the Employment Term shall terminate on the date of Executive's
death. In such event, (i) Executive's estate shall be paid the amount specified
in Section 4(g)(i) below and one (1) times Executive's annual rate of Base
Salary and (ii) the Company shall provide Executive's spouse and dependents with
welfare benefits as provided in Section 4(g)(ii) for one (1) year from the date
of death.
4(g) Termination Compensation. Upon the termination of the
Employment Term and Executive's employment hereunder (including any nonextension
of the Employment Term), the Company shall provide Executive with the payments
and benefits set forth below. Executive acknowledges and agrees that the
payments and benefits set forth in this Section and elsewhere herein and in
other written grants and agreements constitute liquidated damages for
termination of his employment hereunder (including any nonextension of the
Employment Term).
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(i) Upon a termination of the Employment Term and Executive's
employment hereunder, Executive shall be entitled to promptly receive (A) his
Base Compensation through the effective date of termination, (B) if such
termination is other than pursuant to Section 4(b) hereof, any annual earned
bonus for any completed fiscal year, (C) if such termination is pursuant to
Sections 4(a), 4(c) or 4(d) hereof, a pro rata share of Executive's annual
target bonus for the fiscal year of termination, (D) the benefits, fringes and
perquisites, including without limitation accrued vacation (provided that if the
termination is pursuant to Section 4(b) or 4(e) hereof, only such payment of
accrued vacation as is required by law or the Company's vacation policy),
provided pursuant to Section 2 hereof up to the effective date of such
termination and (E) any other amount due to Executive under any other program or
plan of the Company.
(ii) In the event of a termination of the Employment Term and
Executive's employment pursuant to Section 4(a) (such reference shall include,
without limitation, a nonextension by the Company pursuant to the terms of
Section 3 hereof) or 4(d) hereof, Executive shall also be entitled to receive an
amount (the "Severance Amount") equal to the sum of (x) three times Executive's
annualized Base Compensation (as in effect on the date of such termination or,
if greater, immediately prior to the Good Reason event, if any, based on which
the termination of employment occurs) and (y) three times
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Executive's Bonus Severance Amount (as defined herein). The "Bonus Severance
Amount" shall mean an amount equal to the average of all annual bonuses earned
by the Executive from the Company in the two (2) fiscal years ending immediately
prior to Executive's termination; provided, however, that if Executive's
termination occurs prior to the end of fiscal 1997, the "Bonus Severance Amount"
shall mean an amount equal to Executive's annual target bonus for 1997 and if it
occurs during fiscal 1998, the "Bonus Severance Amount" shall be the higher of
Executive's annual bonus amount for the 1997 fiscal year or Executive's annual
target bonus for 1998. The Severance Amount shall be payable in a lump sum
within thirty (30) days of such termination. In the event of a termination
pursuant to Section 4(a), 4(c) or 4(d) hereof, Executive (his spouse and his
dependents, if applicable) shall also be entitled to continue to participate in
the medical, dental, hospitalization and life insurance programs existing on the
date of termination (or any replacement plans for any such plans) with regard to
senior executive officers of a similar level and in the noncontributory
wrap-around medical and dental plan referred to in Section 2(c) (or their cash
equivalents, and, if the Company provides a cash payment in lieu of such
benefits, it shall be calculated on a grossed-up tax basis as if Executive had
remained an employee) for three (3) years from the date of termination;
provided, that Executive shall be obligated to make all employee contributions
required to receive such benefits under the Company's programs (other than the
noncontributory wrap-around medical and dental
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arrangements) and that such continued benefits shall terminate on the date or
dates Executive receives equivalent coverage and benefits, without waiting
period or pre-existing conditions 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). Executive shall not be
entitled to any compensation or benefits pursuant to this Section 4(g)(ii) if
his employment hereunder is terminated pursuant to Section 4(b) or as a result
of Executive's voluntary termination pursuant to Section 4(e).
(iii) Executive shall have such rights under the Company's
Omnibus Share Plan or any other benefit plan, and any agreements entered into in
connection therewith, in accordance with the terms of such plans, grants
thereunder and agreements.
4(h) No Mitigation. All amounts due hereunder shall be paid
without any obligation to mitigate and such amounts shall not be reduced by or
offset by any other amounts earned by Executive or any claims of the Company
other than that the Company may set off any principal and interest then due and
payable with regard to the loan grants pursuant to Section 2(g).
5. Noncompetition.
5(a) Noncompetition. During the Employment Term and for a
period of one (1) year thereafter (other than if the Employment Term ends as a
result of a termination pursuant to
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Section 4(a), 4(c), or 4(d) hereof), Executive shall not engage in any way,
directly or indirectly, in the acquisition, operation, development, management,
leasing or disposition of any primarily commercial office real estate property
(mixed properties being determined primarily commercial office real estate
property or other by the relative square footage of each) or any improvements
thereof located in the Restricted Area (as defined below), other than in his
capacity as an employee, director, trustee, officer or equity owner of the
Company; provided, however, that this Section 5(a) shall not apply to (i)
Executive's activities with respect to any property listed in Exhibit A attached
hereto, provided that such activities are reasonably necessary to avoid a breach
of Executive's or the general partner's fiduciary or other duty to the owner or
other owners of such property (Executive agrees that the activities prohibited
by Section 5(c) are not reasonably necessary to avoid a breach of such duties),
(ii) the acquisition, operation, development, management, leasing or disposition
of any property by any entity in which Executive owns or acquires an equity
interest as a minority passive investor (including, but not limited to as a
limited partner or a non-operating member of a limited liability company, but
not including as a general partner) having no managerial or similar role with
respect to such property, (iii) Executive's or his spouse's or issue's
acquisition of any property or any interest in any property by inheritance, (iv)
advice and other limited assistance with regard to his spouse's and her family's
effectively passive interests in
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real estate investments (including but not limited to MIL Equities) or his
spouse's effectively passive interests in real estate investments managed,
directly or indirectly, by her brother-in-law and his partners or (v)
Executive's performance of management company services for other entities while
employed by the Company which performance by Executive is authorized by an
agreement between the Company and such other entity or between the Company and
Executive. For purposes of this Agreement, the "Restricted Area" is any location
within fifty (50) miles of any commercial office building managed by the Mendik
Management Company, Inc. at the time of any action by Executive during the
Employment Term or at the date of Executive's termination of employment in the
event of any action by Executive following his termination of employment.
5(b) Reasonable and Necessary Restrictions. Executive
acknowledges that the restrictions, prohibitions and other provisions of this
Section 5 are reasonable, fair and equitable in scope, terms and duration, are
necessary to protect the legitimate business interests of the Company, and are a
material inducement to the Company to enter into this Agreement.
5(c) Non-Solicitation. Executive agrees that during the
Employment Term (i) and for a period of two (2) years following the date of
termination of Executive's employment hereunder, Executive will not solicit any
of the Company's or its affiliate's (within the meaning of Rule 12(b)-2 of the
Securities Exchange Act of 1934, but only if in addition such entity would
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be classified as a parent or subsidiary of the Company or of a parent, all
within the meaning of Section 424(e) or Section 424(f) of the Code, if twenty
five percent (25%) were substituted for fifty percent (50%) therein) (an
"Affiliate") non-clerical employees, agents or independent contractors to end
their relationship with the Company or its Affiliates, provided that the
provision of this Section 5(c) shall not apply to the giving of references (ii)
and for a period of one (1) year following the termination of Executive's
employment hereunder, Executive will not pursue or attempt to develop or to
direct to any other entity any project known to Executive which the Company is
or was pursuing, developing or attempting to develop during the Employment Term
or interfere or otherwise compete (other than in connection with performing
services for the Company or its Subsidiaries with regard to other properties
managed by the Company or its Subsidiaries or for other management companies
where Executive is performing services with the consent of the Company) with
active lease negotiations of the Mendik Division which the Executive is or was
actively involved in conducting or strategizing on behalf of the Company or its
Subsidiaries (in each case, a "Project"), unless such Project has been inactive
for over nine (9) months. Notwithstanding the foregoing, in the event of a
Change in Control and the Executive's employment terminating within one hundred
twenty (120) days thereafter, the determination of projects being "pursued,
developed or attempted to be developed" shall be limited to projects the Company
was pursuing, developing or attempting to develop prior to the Change
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in Control plus any project that Executive becomes materially involved in on
behalf of the Company after the Change in Control.
5(d) 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
business 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 the Executive in good faith believes may be required,
appropriate or desirable 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 cooperate with the Company, at the Company's expense,
in the Company seeking to obtain 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 furtherance of its
business or to perform duties hereunder.
5(e) Removal of Documents. All records, files, drawings,
documents, models, equipment, and the like relating to the Company's business,
which Executive has control over shall
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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's rolodex,
telephone directory and similar type items, and furniture, art work and property
owned by Executive or otherwise not owned by the Company shall not be deemed
Company property and shall not be covered by this Section 5(e). The Company
shall be the owner of all trade secrets and other products relating to the
Company's business developed by Executive alone or in conjunction with others as
part of his employment with the Company.
5(f) Specific Performance. Executive acknowledges that the
Company likely will have no adequate remedy at law if Executive shall fail to
perform any of his obligations hereunder, and the Executive therefore confirms
that the right of the Company to specific performance of the terms of this
Section 5 is essential to protect the rights and interests 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,
agreements and other provisions of this Section 5 specifically performed by
Executive, and the Company shall have the right to obtain preliminary injunctive
relief to
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secure specific performance and to prevent a breach of this Section 5 by
Executive.
6. Miscellaneous.
6(a) Integration; Amendment. This Agreement supersedes and
renders of no force and effect all prior understandings and agreements with
respect to the matters set forth herein. No amendments or additions to this
Agreement shall be binding unless in writing and signed by all of the parties.
6(b) Assignment. No rights or obligations of the Company under
this Agreement may be assigned or transferred, except in connection with a
merger, consolidation or sale of all or substantially all of the assets of the
Company or the Mendik Division, where the Company's successor expressly assumes
and agrees 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, provided that the foregoing assignment shall not serve as a release of
the Company. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets or the
Mendik Division's business and/or assets, as the case may be, which executes and
delivers the agreement provided for in this Section 6(b) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law, and any assignment in accordance with the first sentence of this Section
6(b) shall not be deemed a termination without Cause by the
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Company. Executive may not assign this Agreement or any right or interest
therein, whether by operation of law or otherwise, without the prior written
consent of the Company, provided that Executive may name a beneficiary in the
event of his death of any amounts due to him hereunder.
6(c) Severability. If any provision of this Agreement shall be
deemed invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed and enforced as if it had never contained such invalid or
unenforceable provision. In addition, in place of such invalid or unenforceable
provision, there shall automatically be added hereto a provision as similar to
such invalid or unenforceable provision as may be possible and still be valid
and enforceable.
6(d) Waivers. The failure or delay of any party at any time to
require performance by any other party of any provision of this Agreement, even
if known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power, or remedy hereunder, and any
waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy under this Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to other or further notice or demand in
similar or other circumstances.
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6(e) Power and Authority. The Company represents and warrants
to Executive that it has the requisite corporate power to enter into this
Agreement and its obligations hereunder; that the execution, delivery and
performance of this Agreement by it has been duly authorized by all appropriate
partnership or corporate action, as applicable; and that this Agreement
represents a valid and legally binding obligation with respect to it and its
enforceable against it in accordance with its terms.
6(f) Burden and Benefit. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and, subject to
Section 6(b) above, assigns. In the event of the death of Executive at or after
his termination, any amounts due hereunder shall be paid to his Estate unless he
has designated a beneficiary.
6(g) Legal Fees and Expenses. If any contest or dispute shall
arise between the Company and Executive regarding any provision of this
Agreement, the Indemnification Agreement or any equity grant or other agreement
or compensation arrangement specifically set forth or provided for herein, 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
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dispute (whether or not appealed) to the extent the Company receives reasonable
written evidence of such fees and expenses.
6(h) Governing Law; Headings. This Agreement and its
construction, performance, and enforceability shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to provisions of conflict of laws. Headings and titles herein are included
solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
6(i) Notices. All notices called for under this Agreement
shall be in writing and shall be deemed to be sufficient if contained in a
written instrument delivered (i) in person, (ii) by first class registered or
certified mail, postage prepaid and return receipt requested, (iii) by overnight
delivery by a recognized courier service providing a receipt, or (iv) by
facsimile transmission confirmed by transmission report, addressed to the
intended recipient at the address set forth on the signature page hereof (or at
such other address for a party as shall be specified by like notice). Any notice
delivered to the party hereto to whom it is addressed shall be deemed to have
been given on the day it was received; provided, however, that if such day is
not a business day, then the notice shall be deemed to have been given and
received on the business day next following such day. If the other party is
aware that the intended recipient is not at the notice location, either
permanently or temporarily, notice also shall be sent to such
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location as the notifying party becomes aware (after reasonable inquiry) that
the intended recipient is then located.
6(j) Counterparts. This Agreement may be executed in one or
more counterparts, each of which counterparts shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
6(k) Joint and Several. The Company and the Operating
Partnership shall be jointly and severally liable for all liabilities and
obligations of each other hereunder or in connection herewith.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement, or
caused this Agreement to be duly executed on their behalf, as of the date first
above written.
VORNADO REALTY TRUST
By: /s/ Joseph Macnow
-----------------------------------
Name: Joseph Macnow
Title: Vice President
Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
THE MENDIK COMPANY, L.P.
By: Vornado Realty Trust,
a general partner
By: /s/ Joseph Macnow
------------------------------
Name: Joseph Macnow
Title: Vice President
Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
EXECUTIVE:
/s/ David R. Greenbaum
----------------------------------------
David R. Greenbaum
330 Madison Avenue
New York, New York 10017
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EXHIBIT A
Arden-Esquire Realty Company
(689 Fifth Avenue and 1320-20 Merrick Blvd, Springfield
Gardens, Queens)
Eleven Penn Plaza Company
E-M New York Properties L.P.
(100 Church Street)
Mendik Real Estate Limited Partnership
Mendik RELP Corp.
Two Park Company
909 Third Company
330 Madison Company
20 Broad Street Company
Broad 20 L.P.
Westport Office Company (55 Greens Farms Road,Westport, CT)
BMS Vail Limited Partnerships I and II
Silver Towers Associates
Great Neck Terrace Associates
M Newtown Associates
Mendik Realty Company, Inc.
Building Maintenance Service LLC
BMDG, Inc.
The Mendik Partnership, L.P.
Mendik Facilities Group, LLP
Guard Management Services Corp.
Building Maintenance Service Corp.
Chatby Associates
Jayby Associates
Melby Associates
Sonby Associates
11 West 42nd Street Associates
Wyby Associates
Stamford Ridgeway Associates
570 Seventh Avenue
521 Fifth Avenue
References to partnerships and other entities are also deemed to include
constituent partners or entities.
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EXHIBIT B
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into as of the day of 1997, by and between Vornado Realty Trust, a Maryland real
estate investment trust (the "Company") and David R. Greenbaum (the
"Executive").
WHEREAS, Executive has agreed to serve, at the request of the Company
as an executive and officer of the Company and, if elected, a director of the
Company; and
WHEREAS, Executive is willing to serve on behalf of the Company on the
condition that he be indemnified as set forth herein.
NOW, THEREFORE, in consideration of Executive's agreement to serve the
Company as set forth above, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
1. General. The Company agrees that if Executive is made a party or
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, officer or employee of the
Company or any subsidiary or division of the Company or is or was serving at the
request of the Company or any subsidiary or
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division of the Company as a trustee, fiduciary, 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, fiduciary, director, officer,
member, employee or agent while serving as a trustee, fiduciary, director,
officer, member, employee or agent, Executive shall be indemnified and held
harmless by the Company to the fullest extent authorized by the law of the State
of Maryland, 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, fiduciary or agent, or is no longer employed
by the Company and shall inure to the benefit of his heirs, executors and
administrators. The indemnification hereunder shall not extend to cover any
Expenses arising out of (i) Executive's activities prior to the date hereof or
(ii) Executive's actions after the date hereof to the extent such actions are
with respect to matters that are covered by the indemnification obligations of
FW/Mendik REIT, L.L.C. and certain of its affiliates under the indemnification
agreement attached to the Merger Agreement as Exhibit R.
2. Expenses. As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, losses,
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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.
3. 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 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,
the laws of the State of Maryland.
4. 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.
5. 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
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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.
6. Notice of Claim. Executive shall give to the Company notice of any
claim against him for which indemnification will or could be sought under this
Agreement at the address set forth on the signature page of this Agreement (or
such other address as provided by notice given as aforesaid). 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.
7. Defense of Claim. With respect to any Proceeding as to which
Executive notifies the Company of the commencement thereof:
(a) The Company will be entitled to participate at its own
expense; and
(b) 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 the Company's
sole discretion may be regular counsel to the Company and may be
counsel to other officers and directors of the Company or any
subsidiary. Executive also shall have the right to
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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.
(c) 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 Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold or delay their
consent to any proposed settlement.
8. 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 Agreement 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
or any subsidiary or any agreement, vote of shareholder or disinterested
directors or trustees or otherwise. In particular, Executive shall be a third
party beneficiary of the indemnity provided in Section 7.7 of the Partnership
Agreement creating The Mendik Company, L.P., a Delaware limited partnership (the
"Mendik Company").
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9. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns (including any direct or indirect successor by merger or
consolidation), heirs, executors and administrators.
10. Governing Law. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed, and governed by and in accordance
with the laws of the State of Maryland, except for the last sentence of Section
8 which shall be construed under the law that applies to the Partnership
Agreement forming The Mendik Company.
11. Amendment. No Amendments or additions to that Agreement shall be
binding unless in writing and signed by all of the parties.
12. Waiver of Breach. The failure or delay of either party at any time
to require performance by the other party of any provision of this Agreement,
even if known, shall not affect the right of such party to require performance
of that provision or to exercise any right, power, or remedy hereunder, and any
waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy under this Agreement. No notice to or demand on any party in any case
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shall, of itself, entitle such party to other or further notice or demand in
similar or other circumstances.
13. Severability. The Company and Executive agree that the agreements
and provisions contained in this Agreement are severable and divisible, that
each such agreement and provision does not depend upon any other provision or
agreement for its enforceability, and that each such agreement and provision set
forth herein constitutes an enforceable obligation between the Company and
Executive. Consequently, the parties hereto agree that neither the invalidity
nor the unenforceability of any provision of this Agreement shall affect the
other provisions hereof, and this Agreement shall remain in full force and
effect and be construed in all respects as if such invalid or unenforceable
provision were omitted.
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IN WITNESS WHEREOF, the parties hereto have entered into this agreement
as of the date first above written.
EXECUTIVE:
-----------------------------------
David R. Greenbaum
[CORPORATE SEAL] VORNADO REALTY TRUST
By:
-------------------------
Name: Joseph Macnow
Title: Vice President
Agreed as to the last
sentence of Section 8:
The Mendik Company, L.P., a Delaware limited partnership, which intends to
change its name to Vornado Realty L.P.
By: Vornado Realty Trust, a general partner
By:
------------------------------
Name: Joseph Macnow
Title: Vice President
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EXHIBIT C
SHARE OPTION GRANTS MADE TO EXECUTIVE
1. A nonqualified stock option granted to Executive, as of March 12, 1997, to
purchase an aggregate of 285,000 common shares, par value $.04 per share, of the
beneficial interest in the Company, pursuant to a certain Share Option
Agreement, dated as of March 12, 1997, by and between the Company and the
Executive, and the provisions of the Company's 1993 Omnibus Share Plan.
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