THIS EMPLOYMENT AGREEMENT (this “ Agreement
”) is made as of this 11th day of December 2006, by and
between Christian H. Clifford (“ Executive ”)
and SSPF/CET Operating Company LLC, a Delaware limited liability
company (the “ Company ”).
WHEREAS , pursuant to an employment agreement, dated
July 5, 2005 (the “ Seller Employment Agreement
”), Executive currently serves as a senior executive of
Columbia Equity Trust, Inc., a Maryland corporation (“
Seller ”); and
WHEREAS , the Company has entered into an Agreement and Plan
of Merger among the Company, SSPF/CET OP Holding Company LLC,
SSPF/CET OP Holding Company Subsidiary L.P., Columbia Equity, L.P.
and Seller, dated as of the 5th day of November, 2006 (the “
Merger Agreement ”); and
WHEREAS, the Company recognizes Executive’s
substantial contribution to the growth and success of the business
of the Seller and desires to provide for the continued employment
of Executive by the Company after the Closing Date (as defined in
the Merger Agreement) and Executive desires to serve as an employee
of the Company, on the terms and conditions of this Agreement;
and
WHEREAS, the Company desires to employ Executive, and
Executive desires to be employed by the Company, all on the terms
and subject to the conditions set forth herein; and
WHEREAS, Executive acknowledges and agrees that this
Agreement supersedes any rights Executive may have under the Seller
Employment Agreement, including any right to change in control,
severance, termination or similar payments or compensation under
such agreement;
WHEREAS, Executive is willing to enter into this Agreement
in consideration of the benefits which Executive will receive under
the terms hereof.
NOW, THEREFORE , for and in consideration of the premises
and the mutual covenants and agreements herein contained, and for
other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as
follows:
1.
Employment Term . Subject to the provisions of
Section 4 of this Agreement, the Company hereby agrees to
employ Executive and Executive hereby agrees to work in the employ
of the Company, subject to the terms and conditions of this
Agreement, for the period commencing on the Closing Date (the
“ Effective Date ”) and ending on the last day
of the month in which occurs the first (1st) anniversary of the
Effective Date (the “ Initial Employment Term
”); provided , however , that upon any
termination of the Merger Agreement in accordance with its terms,
this Agreement shall be null and void. Commencing on the last day
of the Initial Employment Term and each anniversary thereafter
(each, an “ Automatic Extension Date ”), the
Initial Employment Term shall be automatically extended for an
additional one (1) year unless either the Company or Executive
has given the other party prior written notice of the intention to
not extend this Agreement not less than sixty (60) days before
the Automatic Extension Date. The Initial Employment Term and any
extensions thereof are referred to herein collectively as the
“ Employment Term .” So long as
Executive’s employment has not been earlier
terminated,
then, upon the
expiration of the Employment Term, Executive shall be considered to
be an employee of the Company “at will.”
2. Position,
Duties and Responsibilities . During the Employment Term,
Executive shall serve as Senior Vice President of Asset Management.
In addition, Executive shall serve in such offices of subsidiaries
and affiliates of the Company as reasonably requested by the
Company, without any additional compensation. Executive shall have
the appropriate authority, duties and responsibilities attendant
with such positions and any other duties that may be assigned by
the Chief Executive Officer of the Company or the Company’s
board of managers (the “ Board ”). Executive
shall devote his full time to the business of the Company and
agrees to use his best efforts, skill and ability to perform his
duties and responsibilities consistent with this Agreement.
Executive shall devote his full business time, attention and
energies to the business of the Company; provided ,
however that nothing shall preclude Executive, subject to
prior approval from the Board (which shall not be unreasonably
withheld), from engaging in any professional, charitable,
educational, religious or similar types of activities or accepting
appointment to or continuing to serve on any board of directors or
trustees of any organization engaged in any such activities;
provided , further , in each case, and in the
aggregate, that such other activities do not inhibit or interfere
with the performance of Executive’s duties under this
Agreement, or conflict in any way with the business of the
Company.
a. Base
Salary . During the Employment Term, the Company shall pay
Executive an annual base salary of One Hundred Seventy Five
Thousand Dollars ($175,000) (“ Base Salary ”),
payable in regular installments in accordance with the
Company’s then current payroll practices. At least annually
the Board shall review Executive’s performance and
compensation and may increase the Base Salary, in its sole
discretion.
b. Annual
Incentive Bonus . During the Employment Term, Executive shall
be eligible for an annual performance bonus (“ Annual
Bonus ”) with respect to each calendar year of the
Company, in a target amount (“ Target Annual Bonus
”) determined by the Board consistent with market
compensation levels in the Washington, D.C. metropolitan area. Each
Annual Bonus shall be payable promptly following a determination by
the Board that the applicable performance criteria have been
satisfied but no later than forty five (45) days after
calendar year-end. The minimum Annual Bonus payable to Executive
for any calendar year during the Employment Term shall be no less
than twenty five percent (25%) of Executive’s Base Salary for
such calendar year.
c. Equity
and Profits Participation . Executive’s equity
participation in the Company and its subsidiaries shall be as set
forth in the limited liability company agreement of SSPF/CET
Operating Company LLC (the “ Company LLC Agreement
”). Management PIH is entitled to a profits participation in
SSPF/CET PI LLC. The Company and its subsidiaries acknowledge and
approve the grant by Management PIH to Executive of an initial
equity interest in Management PIH of 750 membership
units.
d.
Signing Payment . Executive shall be entitled to an amount
equal to Four Hundred Twelve Thousand Five Hundred Dollars
($412,500) as and for a signing bonus from the Company (“
Signing Payment ”). The Signing Payment shall be fully
earned upon the Effective Date, but shall be payable in two
(2) equal installments on each of the Effective Date and the
first (1 st
) anniversary of the Effective Date,
regardless of whether Executive is still employed by
Employment Agreement
Christian H Clifford
-2-
the Company as
of such payment date. Thus, upon a termination of employment for
any reason, Executive shall continue to be entitled to receive, in
addition to any other payment due to Executive pursuant to
Section 5 hereof, the unpaid portion of the Signing Payment on
the first (1 st )
anniversary of the Effective Date. This obligation shall fully
survive the termination of the Employment Term.
e.
Directors and Officers Insurance . The Company shall
maintain directors and officers liability insurance for the benefit
of Executive, in an amount not less than the amount of such
coverage maintained by Seller on the Effective Date, with respect
to acts (or failure to act) which occurred in connection with
Executive’s employment with Seller prior to the Effective
Date for such time as Executive is exposed to liability for such
acts (or failure to act). With respect to acts (or failure to act)
which occur in connection with Executive’s employment with
the Company after the Effective Date, the Company shall maintain
such coverage as is customary for non-public companies.
f.
Vacation . During the Employment Term, Executive shall be
entitled to at least four (4) weeks’ paid vacation in
each calendar year, together with leave of absence and leave for
illness or temporary disability in accordance with the policies of
the Company in effect from time to time; provided ,
however , in no event shall Executive be permitted to
carryover more than one week of unused vacation time from year to
year.
g.
Business Expenses . During the Employment Term, the Company
shall reimburse Executive for documented reasonable and necessary
business expenses incurred on the Company’s behalf in
performing Executive’s duties and promoting the business of
the Company, including reasonable entertainment, travel and lodging
expenses, in accordance with the Company’s business expense
reimbursement policies.
h. Other
Benefits . In addition to the foregoing, during the Employment
Term, Executive shall be eligible to participate in the employee
benefit plans that the Company generally provides from time to time
to its similarly situated senior executive employees, such as
retirement benefits, upon the same terms and conditions that the
Company generally makes such benefits available to its similarly
situated senior executive employees and Executive shall be entitled
to receive such other fringe benefits as may be granted to him from
time to time by the Company.
a. Death
and Disability . Executive’s employment hereunder shall
terminate automatically upon Executive’s death during the
Employment Term. If the Company determines in good faith that the
Disability of Executive has occurred during the Employment Term,
Executive may be terminated by the Company upon thirty
(30) days prior written Notice of Termination from the Company
to Executive; provided that Executive has not returned to full-time
performance of his duties hereunder within that time. For purposes
of this Agreement, “ Disability ” shall have the
meaning assigned to such term or similar term under a disability
insurance policy maintained by the Company covering Executive or,
if there is no such policy, shall mean Executive’s inability,
by reason of a mental or physical illness or impairment, to
substantially perform his duties hereunder for a period of one
hundred twenty (120) consecutive days and the return of
Executive to his duties for periods of fifteen (15) days or
less shall not interrupt such one hundred twenty (120)-day
period.
Employment Agreement
Christian H Clifford
-3-
b.
Termination by the Company For Cause . The Company may
terminate Executive’s employment hereunder for Cause,
effective immediately upon the Company’s delivery of a
written Notice of Termination to Executive or such later date
provided in such written Notice of Termination. For purposes of
this Agreement, “ Cause ” shall mean:
(i)
Executive’s intentional and continued failure (other than by
reason of mental or physical illness) to perform reasonably
assigned material duties if such failure has a materially and
demonstrably detrimental effect on the business operations of the
Company or if the Board reasonably and in good faith concludes such
failure could reasonably be expected to have a materially and
demonstrably detrimental effect on the business operations of the
Company;
(ii)
Executive’s willful misconduct in the performance of
Executive’s duties;
(iii)
Executive’s conviction of, or plea of guilty or nolo
contendere to, a felony under the laws of the United States or
any state or political subdivision thereof;
(iv)
Executive’s breach of any non-competition, non-disclosure or
non-solicitation provisions of this Agreement or of any other such
agreement with the Company; or
(v) Executive
commits any fraud, embezzlement, misappropriation of funds, or
breach of fiduciary duty against the Company, in each case of a
material nature;
provided , however , that if such termination is
based on any event set forth in clause (i) or (ii) above,
Executive shall have thirty (30) days after receipt of the
Notice of Termination in which to cure the failure, breach or
infraction described in the Notice of Termination and shall be
afforded an opportunity to present his position or defense to the
Board. If the failure, breach or infraction is timely cured by
Executive or the Board determines that Cause for Executive’s
termination does not exist, the Notice of Termination shall become
null and void.
c.
Termination by the Company Without Cause . The Company may
terminate Executive’s employment hereunder without Cause
(other than for Disability) at any time upon at least thirty
(30) days written Notice of Termination to Executive
specifying Executive’s date of termination of
employment.
d.
Resignation by Executive For Good Reason . Executive may
resign for Good Reason upon at least thirty (30) days prior
written Notice of Termination to the Company. For purposes of this
Agreement, “ Good Reason ” shall mean, without
the express written consent of Executive, the occurrence of any of
the following:
(i) a demotion of
Executive or a material diminution in Executive’s duties,
functions and responsibilities with respect to the
Company;
(ii) the
Company’s causing Executive to relocate his employment more
than fifty (50) miles from the location of Executive’s
principal office on the Effective Date;
(iii) a
substantial reduction of Executive’s Base Salary, as such may
be increased from time to time after the date of this
Agreement;
(iv) the
Commingled Pension Trust Fund (Special Situation Property) of
JPMorgan Chase Bank, N.A., a trust governed by the laws of New York
(“ SSPF ”) changes its investment focus from a
value-added strategy to a lower risk strategy;
Employment Agreement
Christian H Clifford
-4-
(v) the net asset
value of SSPF falls below $1.25 billion; or
(vi) SSPF fails to
make (or cause to be made) within two years from the Effective Date
at least $80 million of additional capital contributions to
SSPF/CET PI LLC which are used to make equity investments in New
Investments (as defined in the Company LLC Agreement);
provided , however , if Executive desires to
terminate his employment for Good Reason, Executive must provide
the Notice of Termination within thirty (30) days after the
occurrence of the event or circumstance providing such basis and if
the Notice of Termination is based on an event described in
Sections 4(d)(i)-(iii), the Company shall have thirty
(30) days after its receipt of Executive’s Notice of
Termination in which to cure or remedy the grounds identified as
Good Reason in the Notice of Termination; provided ,
further , that Good Reason under Sections 4(d)(iv)-(vi)
shall not exist unless Executive shall have previously or
simultaneously furnished notice to the Company that Executive is
electing to redeem all his Common Units (as defined in the Company
LLC Agreement) pursuant to the Company LLC Agreement. If the
grounds for Good Reason are timely cured or remedied by the
Company, Executive’s Notice of Termination shall become null
and void.
e.
Resignation by Executive Without Good Reason . Executive may
resign without Good Reason at any time after delivery of written
Notice of Termination by Executive to the Company.
f. Notice
of Termination . Any termination by the Company or by Executive
shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, “ Notice of
Termination ” shall mean a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive’s employment
under the provision so indicated, and (iii) the Date of
Termination.
g. Date
of Termination . For purposes of this Agreement, “
Date of Termination ” shall mean (i) if
Executive’s employment is terminated by his death, the date
of his death, (ii) if Executive’s employment is
terminated by the Company (other than pursuant to
Sections 4(b)(i) or 4(b)(ii)), the date of receipt of the
Notice of Termination or any later date specified therein, and
(iii) if Executive’s employment is terminated for any
other reason, the date thirty (30) days following the date on
which the Notice of Termination is provided.
5.
Obligations of the Company upon Termination .
a.
Death . In the event that Executive’s employment is
terminated as a result of Executive’s death, the Company
shall have no further obligations to Executive (or
Executive’s estate) other than to provide: (i) a lump
sum payment, within ten (10) days following the Date of
Termination, in an amount equal to the Cash Accrued Benefits (as
hereinafter defined), (ii) the Accrued Benefits (as
hereinafter defined), (iii) a lump sum payment, within ten
(10) days following the Date of Termination, equal to the
amount of the Pro Rata Portion of Executive’s Maximum Bonus
(each as defined below), and (iv) a lump sum payment, within
ten (10) days following the Date of Termination, in an amount
equal to one-half ( 1 / 2
) of Executive’s annual Base
Salary. All of Executive’s outstanding options, restricted
stock awards and any other equity rights granted by the Company to
Executive shall continue to be governed by the grant
Employment Agreement
Christian H Clifford
-5-
agreement,
related plan, limited liability company agreement or operating
agreement, as applicable.
For purposes of
this Agreement,
“ Cash
Accrued Benefits ” shall mean (i) any unpaid Base
Salary earned or accrued through the Date of Termination,
(ii) any accrued but unused vacation benefit, and
(iii) any reimbursement for business expenses owed to
Executive by the Company.
“ Accrued
Benefits ” shall mean all payments and benefits other
than the Cash Accrued Benefits to which Executive may be entitled
under the terms of any applicable compensation arrangement or
employee benefit plan or program (including COBRA, disability or
death benefit plans) of the Company.
“ Maximum
Bonus ” shall mean the greater of (i) the highest
aggregate Annual Bonus paid to Executive by the Company (or by
Seller, or Seller’s predecessor for 2004 as disclosed in the
prospectus for the initial public offering of Seller’s common
stock) for any of the three (3) calendar years prior to the year
that includes the Date of Termination or (ii) the Target
Annual Bonus that Executive was eligible to receive for the
calendar year that includes the Date of Termination. In no event
shall the Maximum Bonus include the Signing Payment.
|
