EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of the 30th
day of April, 1998, among Xxxxxxx Real Estate, Inc. a Maryland corporation (the
"Company"), Xxxxxxx Operating Limited Partnership, a Delaware limited
partnership (together with the Company, the "Employer"), and Xxxxxx X. D'Arcy
("Executive").
WHEREAS, Executive is currently serving as the President and Chief
Executive Officer of the Company and a member of the Board of Directors of the
Company;
WHEREAS, Executive is desirous of committing himself to serve the Employer
on the terms herein provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT. The initial term (Initial Term) of this Agreement shall be
effective from January 1, 1998 to December 31, 2000. This Agreement shall be
extended automatically for an additional one year period (Renewal Term) through
December 31, 2001, unless either party elects by notice in writing delivered to
the other not later than December 31, 1999 of its intent not to extend the
Agreement and thereafter shall be extended automatically on an "evergreen basis"
for a further one year term (a Further Renewal Term) through December 31 of the
next following calendar year unless either party elects by such notice to the
other not later than December 31 of the year that is at least one year prior to
the Further Renewal Term of its intent not to extend the Agreement for such a
Further Renewal Term. The Initial Term, Renewal Term and any Further Renewal
Term of this Agreement shall be subject to termination as provided in Paragraph
7 and are referred to in this Agreement as the Period of Employment.
2. POSITION AND DUTIES. During the Period of Employment, Executive shall
serve as the President and Chief Executive Officer of the Company, reporting to
the Board of Directors of the Company (the "Board"), and a member of the Board,
and shall have supervision and control over and responsibility for the day-to-
day business and affairs of the Employer, and shall have such other powers and
duties as may from time to time be prescribed by the Board, provided that such
duties are consistent with Executive's position or other positions that he may
hold from time to time. Should, during the Period of Employment, Executive not
be nominated to serve (or, if nominated, not be elected to serve) as a member of
the Board, then Executive may, as provided in Subparagraph 7(e), terminate his
employment hereunder, which termination shall be deemed to be for Good Reason,
as defined in Subparagraph 7(e). Except as may be otherwise approved by the
Board, Executive shall devote substantially all his full working time and
efforts to the business and affairs of the Employer. Notwithstanding the
foregoing, Executive may serve on other boards of directors or engage in
religious, charitable
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or other community activities as long as such services and activities are
disclosed to the Board and do not materially interfere with Executive's
performance of his duties to the Employer as provided in this Agreement. Subject
to the provisions of Paragraph 5 below and the approval of the Board, Executive
may also engage in other business and receive compensation therefor, so long as
such activities do not materially interfere with Executive's performance of his
duties hereunder.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. The parties hereto agree that the Executive shall
receive a base annual salary ("Base Salary") for calendar year 1998 of Three
Hundred Twenty-Five Thousand Dollars ($325,000.00). Thereafter, Executive's Base
Salary shall be redetermined not less frequently than annually at such amount as
is fixed by the Board (or the Compensation Committee thereof). The Base Salary,
as redetermined, may be referred to herein as "Adjusted Base Salary." The Base
Salary or Adjusted Base Salary shall be payable in substantially equal
installments in accordance with Employer's payment practices for senior
executives and shall in no way limit or reduce the obligations of the Employer
hereunder.
(b) INCENTIVE COMPENSATION. In addition to Base Salary or Adjusted Base
Salary, Executive shall be eligible to receive, on or about the annual
compensation determination date established by the Employer for each year that
is within the Period of Employment, cash incentive compensation in an amount
determined by the Compensation Committee of the Board based on individual
performance, performance by the Employer and total return to stockholders.
Executive shall also be eligible to receive during the Period of Employment such
grants of long-term stock-based incentive compensation under the Company's Stock
Option and Incentive Plan as the Board or the Compensation Committee shall
determine.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by him (in accordance with
the policies and procedures then in effect and established by the Employer for
its senior executive officers) in performing services hereunder during the
Period of Employment, provided that Executive properly accounts therefor in
accordance with Employer policy. Additionally, the Employer will provide an
automobile for Executive's use during the Period of Employment. Employer shall
bear all reasonable expenses associated with the Executive's use of the
automobile that are related to the Executive's performance of his duties under
this Agreement. The Executive and the Employer shall agree on the make and model
of automobile to be provided for the Executive's use.
(d) OTHER BENEFITS. During the Period of Employment, Executive shall be
entitled to continue to participate in or receive benefits under all of the
Employer's Employee Benefit Plans in effect on the date hereof, or under plans
or arrangements that provide Executive with at least substantially equivalent
benefits to those provided under such Employee Benefit Plans. As used herein,
"Employee Benefit Plans" include, without limitation, each pension and
retirement plan; supplemental pension, retirement and deferred compensation
plan; savings and
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profit-sharing plan; stock ownership plan; stock purchase plan; stock option
plan; life insurance plan; medical insurance plan; disability plan; and health
and accident plan or arrangement established and maintained by the Employer on
the date hereof. To the extent that the scope or nature of benefits described in
this section are determined under the policies of the Employer based in whole or
in part on the seniority or tenure of an employee's service, Executive shall be
deemed to have a tenure with the Employer equal to the actual time of
Executive's service with Employer. During the Period of Employment, Executive
shall be entitled to participate in or receive benefits under any employee
benefit plan or arrangement which may, in the future, be made available by the
Employer to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plan or arrangement. Nothing paid to Executive under the Employee Benefit Plans
presently in effect or any employee benefit plan or arrangement which may be
made available in the future shall be deemed to be in lieu of compensation
payable to Executive under Subparagraphs 3(a) and 3(b) to the extent that
Subparagraph 3(a) and 3(b) provide for compensation that is not provided for
under an Employee Benefit Plan. Any payments or benefits payable to Executive
under a plan or arrangement referred to in this Subparagraph 3(d) in respect of
any calendar year during which Executive is employed by the Employer for less
than the whole of such year shall, unless otherwise provided in the applicable
plan or arrangement, be prorated in accordance with the number of days in such
calendar year during which he is so employed. Should any such payments or
benefits accrue on a fiscal (rather than calendar) year, then the proration in
the preceding sentence shall be on the basis of a fiscal year rather than
calendar year.
(e) LIFE INSURANCE. The Employer shall pay the premiums on, and maintain
in effect throughout the Period of Employment, a life insurance policy on the
life of Executive in an amount not less than Two Million Dollars
($2,000,000.00). Executive shall have the right to designate the beneficiary
under such policy. Such life insurance policy may also name, or be combined with
another life insurance policy on the life of the Executive which names, the
Employer as beneficiary of a like sum.
(f) VACATIONS. Executive shall be entitled to the number of paid
vacation days in each calendar year determined by the Employer from time to time
for its senior executive officers. Executive shall also be entitled to all paid
holidays given by the Employer to its senior executive officers. To the extent
that the scope or nature of benefits described in this section are determined
under the policies of the Employer based in whole or in part on the seniority or
tenure of an employee's service, Executive shall be deemed to have a tenure with
the Employer equal to the actual time of Executive's service with Employer.
(g) DISABILITY INSURANCE. The Employer shall pay the premiums on, and
maintain in effect throughout the Period of Employment, long-term disability
insurance providing for payment of benefits at rates not less than sixty percent
(60%) of Executive's current Base Salary or Adjusted Base Salary.
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4. BOARD SERVICE. Executive agrees to serve as a director of the Company, if
elected or appointed thereto, provided he is indemnified for serving in such
capacity.
5. UNAUTHORIZED DISCLOSURE.
(a) CONFIDENTIAL INFORMATION. As used in this Agreement, "Confidential
Information" means information belonging to the Employer which is of value to
the Employer in the course of conducting its business and the disclosure of
which could result in a competitive or other disadvantage to the Employer.
Confidential Information includes, without limitation, financial information,
reports, and forecasts; inventions, improvements and other intellectual
property; trade secrets; know-how; designs, processes or formulae; price and
cost information; manuals, letters, and notebooks; procedures; products;
services; software; market or sales information, techniques or plans; customer
lists and other client information; and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses or
facilities) which have been discussed or considered by the management of the
Employer, and other confidential information and knowledge. Confidential
Information includes information developed by the Executive in the course of the
Executive's employment by the Employer, as well as other information to which
the Executive may have access in connection with the Executive's employment.
Confidential Information also includes the confidential information of others
with which the Employer has a business relationship. Notwithstanding the
foregoing, Confidential Information does not include information in the public
domain, unless due to breach of the Executive's duties under Section 5(b).
(b) CONFIDENTIALITY. The Executive understands and agrees that the
Executive's employment creates a relationship of confidence and trust between
the Executive and the Employer with respect to all Confidential Information. At
all times, both during the Executive's employment with the Employer and after
its termination, the Executive will keep in confidence and trust all such
Confidential Information, and will not use or disclose any such Confidential
Information without the written consent of the Employer, except as may be
necessary in the ordinary course of performing the Executive's duties to the
Employer.
(c) DOCUMENTS, RECORDS, ETC. All documents, records, data, apparatus,
equipment and other physical property, whether or not pertaining to Confidential
Information, which are furnished to the Executive by the Employer or are
produced by the Executive in connection with the Executive's employment will be
and remain the sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by the Employer.
In any event, the Executive will return all such materials and property
immediately upon termination of the Executive's employment for any reason. The
Executive will not retain with the Executive any such material or property or
any copies thereof after such termination.
(d) HEIRS, SUCCESSORS, AND LEGAL REPRESENTATIVES. The foregoing
provisions of this Paragraph 5 shall be binding upon Executive's heirs,
successors, and legal representatives. The provisions of this Paragraph 5 shall
survive the termination of this Agreement for any reason.
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6. COVENANT NOT TO COMPETE. The provisions of this Paragraph 6 shall apply
during Executive's employment with the Employer and for a period of two (2)
years commencing when the employment relationship has ended for any reason other
than death. In consideration for Executive's employment by the Employer under
the terms provided in this Agreement and as a means to aid in the performance
and enforcement of the terms of the Unauthorized Disclosure provisions of
Paragraph 5, Executive agrees that Executive will not, directly or indirectly,
as an owner, director, principal, agent, officer, employee, partner, consultant,
servant, or otherwise, carry on, operate, manage, control, or become involved in
any manner with any business, operation, corporation, partnership, association,
agency, or other person or entity a substantial portion of the assets or
operations of which consist of the acquisition, ownership or management of
community and neighborhood shopping centers in the Midwest region of the United
States. Further, Executive will not directly or indirectly solicit or induce
any present or future employee of the Employer to accept employment with
Executive or with any business, operation, corporation, partnership,
association, agency, or other person or entity with which Executive may be
associated, and Executive will not employ or cause any business, operation,
corporation, partnership, association, agency, or other person or entity with
which Executive may be associated to employ any present or future employee of
the Employer without providing the Employer with ten (10) days' prior written
notice of such proposed employment. Should Executive violate the provisions of
this Paragraph, then in addition to all other rights and remedies available to
the Employer at law or in equity, the duration of this covenant shall
automatically be extended for the period of time from which Executive began such
violation until he permanently ceases such violation.
7. TERMINATION. Executive's employment hereunder may be terminated without
any breach of this Agreement under the following circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon his
death.
(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from his duties
hereunder on a full-time basis for one hundred eighty (180) calendar days in the
aggregate in any twelve (12) month period, the Employer may terminate
Executive's employment hereunder.
(c) TERMINATION BY EMPLOYER FOR CAUSE. At any time during the Period of
Employment, the Employer may terminate Executive's employment hereunder for
Cause if such termination is approved by not less than a majority of the entire
membership of the Board at a meeting of the Board called and held for such
purpose. For purposes of this Agreement "Cause" shall mean: (A) conduct by
Executive constituting a material act of willful misconduct in connection with
the performance of his duties, including, without limitation, misappropriation
of funds or property of the Employer or any of its affiliates other than the
occasional, customary and de minimis use of Employer property for personal
purposes; (B) criminal or civil conviction or conduct by Executive that would
reasonably be expected to result in material injury to the reputation of the
Employer if he were retained in his position with the Employer, including,
without limitation, conviction of a felony involving moral
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turpitude; or (C) continued, deliberate non-performance by Executive of his
duties hereunder (other than by reason of Executive's physical or mental
illness, incapacity or disability) and such non-performance has continued for
more than thirty (30) days following written notice of such non-performance from
the Board or (D) a breach by the Executive of any of the provisions contained in
Paragraphs 5 and 6 of this Agreement.
(d) TERMINATION WITHOUT CAUSE. At any time during the Period of
Employment, the Employer may terminate Executive's employment hereunder without
Cause if such termination is approved by not less than a majority of the entire
membership of the Board at a meeting of the Board called and held for such
purpose. Any termination by the Employer of Executive's employment under this
Agreement which does not constitute a termination for Cause under Subparagraph
7(c), or result from the death or disability of the Executive under Subparagraph
7(a) or (b) or result from the expiration of the Period of Employment without
extension, shall be deemed a termination without Cause.
(e) TERMINATION BY EXECUTIVE. Executive may terminate his employment
hereunder during the Initial Term of this Agreement for Good Reason and at any
time thereafter for any reason. For purposes of this Agreement, "Good Reason"
shall mean that Executive has complied with the "Good Reason Process"
(hereinafter defined) following the occurrence of any of the following events:
(A) a substantial diminution or other substantial adverse change, not consented
to by Executive, in the nature or scope of Executive's responsibilities,
authorities, powers, functions or duties from the responsibilities, authorities,
powers, functions or duties exercised by Executive immediately prior to the
Commencement Date; (B) any removal, during the Period of Employment, of
Executive from or, any failure by management to nominate, or, if nominated, any
failure by the stockholders to re-elect, Executive to any of the positions
indicated in Paragraph 2, except in connection with a termination of Executive's
employment; (C) an involuntary reduction in Executive's Base Salary or Adjusted
Base Salary or involuntary reduction in cash incentive compensation plan (but
not reduction in incentive compensation appropriate for level of performance)
except for across-the-board salary reductions similarly affecting all or
substantially all management employees; (D) a breach by the Employer of any of
its other material obligations under this Agreement and the failure of the
Employer to cure such breach within thirty (30) days after written notice
thereof by Executive; (E) the relocation of the Employer's offices at which
Executive is principally employed or the relocation of the offices of
Executive's primary workgroup to a location more than fifty (50) miles from such
offices, or the requirement by the Employer for Executive to be based anywhere
other than the Employer's offices at such location on an extended basis, except
for required travel on the Employer's business to an extent substantially
consistent with Executive's business travel obligations. "Good Reason Process"
shall mean that (i) the Executive reasonably determines in good faith that a
"Good Reason" event has occurred; (ii) Executive notifies the Employer in
writing of the occurrence of the Good Reason event; (iii) Executive cooperates
in good faith with the Employer's efforts, for a period not less than ninety
(90) days following such notice, to modify Executive's employment situation in a
manner acceptable to Executive and Employer; and (iv) notwithstanding such
efforts, one or more of the Good Reason events continues to exist and has not
been modified in a manner acceptable to Executive.
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(f) NOTICE OF TERMINATION. Except for termination as specified in
Subparagraph 7(a), any termination of Executive's employment by the Employer or
any such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.
(g) DATE OF TERMINATION. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Subparagraph
7(b), the date on which Notice of Termination is given; (C) if Executive's
employment is terminated by the Employer under Subparagraph 7(c) or (d), thirty
(30) days after the date on which a Notice of Termination is given; and (D) if
Executive's employment is terminated by Executive under Subparagraph 7(e),
thirty (30) days after the date on which a Notice of Termination is given.
8. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) If Executive's employment terminates by reason of his death, the
Employer shall, within ninety (90) days of death, pay in a lump sum amount to
such person as Executive shall designate in a notice filed with the Employer or,
if no such person is designated, to Executive's estate, Executive's accrued and
unpaid Base Salary or, if applicable, his Adjusted Base Salary, to the date of
his death, plus his accrued and unpaid incentive compensation under Subparagraph
3(b). All unvested stock options and stock-based grants shall immediately vest
in Executive's estate or other legal representatives and become exercisable, and
Executive's estate or other legal representatives shall have one (1) year from
the Date of Termination, or remaining option term, if earlier, to exercise the
stock options. For a period of one (1) year following the Date of Termination,
the Employer shall pay such health insurance premiums as may be necessary to
allow Executive's spouse and dependents to receive health insurance coverage
substantially similar to coverage they received prior to the Date of
Termination. In addition to the foregoing, any payments to which Executive's
spouse, beneficiaries, or estate may be entitled under any employee benefit plan
shall also be paid in accordance with the terms of such plan or arrangement.
Such payments, in the aggregate, shall fully discharge the Employer's
obligations hereunder.
(b) During any period that Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness, Executive
shall continue to receive his accrued and unpaid Base Salary or, if applicable,
his Adjusted Base Salary and accrued and unpaid incentive compensation payments
under Subparagraph 3(b), until Executive's employment is terminated due to
disability in accordance with Subparagraph 7(b) or until Executive terminates
his employment in accordance with Subparagraph 7(e), whichever first occurs.
After Executive's employment is terminated due to disability in accordance with
Subparagraph 7(b), the Employer shall continue to pay Executive his Base Salary
or, if
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applicable, his Adjusted Base Salary for twelve (12) months. All unvested stock
options and stock-based grants shall immediately vest and become exercisable and
Executive shall have one (1) year from the Date of Termination, or remaining
option term, if earlier, to exercise the stock options. For a period of one (1)
year following the Date of Termination, the Employer shall pay such health
insurance premiums as may be necessary to allow Executive, Executive's spouse
and dependents to receive health insurance coverage substantially similar to
coverage they received prior to the Date of Termination. Upon termination due to
death prior to the termination first to occur as specified in the preceding
sentence, Subparagraph 8(a) shall apply.
(c) If Executive's employment is terminated by Executive after the
Initial Term of this Agreement other than for Good Reason as provided in
Subparagraph 7(e), then the Employer shall, through the Date of Termination, pay
Executive his accrued and unpaid Base Salary or, if applicable, his Adjusted
Base Salary at the rate in effect at the time Notice of Termination is given.
Thereafter, the Employer shall have no further obligations to Executive except
as otherwise expressly provided under this Agreement, provided any such
termination shall not adversely affect or alter Executive's rights under any
employee benefit plan of the Employer in which Executive, at the Date of
Termination, has a vested interest, unless otherwise provided in such employee
benefit plan or any agreement or other instrument attendant thereto.
(d) If Executive terminates his employment for Good Reason as provided
in Subparagraph 7(e) or if Executive's employment is terminated by the Employer
without Cause as provides in subparagraph 7(d), then the Employer shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base-Salary at the rate in effect at the time Notice of
Termination is given and his accrued and unpaid incentive compensation under
Subparagraph 3(b). In addition, subject to signing by Executive of a general
release of claims in a form and manner satisfactory to the Employer,
(i) the Employer shall pay Executive, on the Date of Termination,
an amount equal to two (2) times the sum of Executive's Average Base Salary
and Average Incentive Compensation (the "Severance Amount"). For purposes
of this Agreement, "Average Base Salary" shall mean the average of the
annual Base Salary or, if applicable, Adjusted Base Salary received by
Executive for each of the three (3) immediately preceding fiscal years or
such fewer number of complete fiscal years commencing on or after January
1, 1998 as Executive may have been employed by the Employer. For purposes
of this Agreement, "Average Incentive Compensation" shall mean the average
of the annual incentive compensation under Subparagraph 3(b) paid in cash
(or in stock if such annual incentive compensation is awarded as such) and
received by Executive for the three (3) immediately preceding fiscal years,
or such fewer number of complete fiscal years commencing on or after
January 1, 1998 as Executive may have been employed by the Employer,
excluding, however, the amounts characterized as "management adjustment
awards" made in 1998 with respect to 1996 and 1997. Notwithstanding the
foregoing, in the event Executive terminates his employment for Good Reason
as provided in Subparagraph 7(e), he shall be entitled to
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the Severance Amount only if he provides the Notice of Termination provided
for in Subparagraph 7(f) within thirty (30) days after the occurrence of
the event or events which constitute such Good Reason as specified in
clauses (A), (B), (C), (D) or (E) of Subparagraph 7(e);
(ii) in addition to any other benefits to which Executive may be
entitled in accordance with the Employer's then existing severance
policies, the Employer shall:
(a) for a period of one (1) year commencing on the Date of
Termination, provide Executive, at the Employer's expense, with an
office, and related telephone and telefax facilities, and an assistant
at a location of Executive's choosing, provided that the office
facilities shall be comparable to Executive's office at the Employer
on the Date of Termination;
(b) for a period of one (1) year commencing on the Date of
Termination, pay for the cost of executive outplacement services
selected by Executive for use in connection with obtaining alternate
employment; and
(c) for a period of one (1) year commencing on the Date of
Termination, pay such health insurance premiums as may be necessary to
allow Executive, Executive's spouse and dependents to continue to
receive health insurance coverage substantially similar to the
coverage they received prior to his termination of employment; and
(iii) Executive shall receive all the rights and benefits granted
or in effect with respect to Executive under the Employer's employee stock
option or incentive plans and agreements with Executive pursuant thereto.
In addition to the foregoing, all stock options and other stock-based
awards granted to Executive shall immediately accelerate and become
exercisable or nonforfeitable as of the Date of Termination.
(e) If Executive's employment is terminated by the Employer for Cause as
provided in Subparagraph 7(c), then the Employer shall, through the Date of
Termination, pay Executive his accrued and unpaid Base Salary or, if applicable,
his Adjusted Base Salary at the rate in effect at the time Notice of Termination
is given. Thereafter, the Employer shall have no further obligations to
Executive except as otherwise expressly provided under this Agreement, provided
any such termination shall not adversely affect or alter Executive's rights
under any employee benefit plan of the Employer in which Executive, at the Date
of Termination, has a vested interest, unless otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.
Notwithstanding the foregoing and in addition to whatever other rights or
remedies the Employer may have at law or in equity, all stock options held by
Executive shall immediately expire on the Date of Termination if Executive's
employment is terminated by the Employer for Cause as provided by Subparagraph
7(c).
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(f) Nothing contained in the foregoing Subparagraphs 8(a) through 8(e)
shall be construed so as to affect Executive's rights or the Employer's
obligations relating to agreements or benefits which are unrelated to
termination of employment.
9. PARACHUTE PAYMENT. The provisions of this Paragraph 9 set forth certain
terms of an agreement reached between Executive and the Employer regarding
Executive's rights and obligations upon the occurrence of a Change in Control of
the Company. These provisions are intended to assure and encourage in advance
Executive's continued attention and dedication to his assigned duties and his
objectivity during the pendency and after the occurrence of any such event.
These provisions shall apply in lieu of, and expressly supersede, the provisions
of Subparagraph 8(d)(i) regarding severance pay upon a termination of
employment, if such termination of employment occurs within eighteen (18) months
after the occurrence of the first event constituting a Change in Control. These
provisions shall terminate and be of no further force or effect beginning
eighteen (18) months after the occurrence of a Change in Control.
(a) CHANGE IN CONTROL. If within eighteen (18) months after the
occurrence of the first event constituting a Change in Control, Executive's
employment terminates for any reason other than (A) death, (B) his inability,
due to illness, accident, or other physical or mental incapacity, to perform his
duties for more than one hundred eighty (180) days during any twelve-month
period, or (C) his Voluntary Resignation ("Termination") other than for Good
Reason as set forth in Subparagraph 7(e) of this Agreement, then:
(i) the Employer shall pay Executive in a lump sum an amount equal
to the applicable Parachute Amount on the tenth (10th) day following
Executive's Termination; and
(ii) unless otherwise provided in the applicable option agreement
or award agreement, all stock options and other stock-based awards granted
to Executive by the Employer shall immediately accelerate and become
exercisable or non-forfeitable as of the date of Change in Control, and
Executive shall be entitled to any other rights and benefits with respect
to stock-related awards, to the extent and upon the terms provided in the
employee stock option or incentive plan or any agreement or other
instrument attendant thereto pursuant to which such options or awards were
granted.
(b) GROSS UP PAYMENT.
(i) Excess Parachute Payment. If Executive incurs the tax (the
"Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") on "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code, the Employer will pay to Executive an amount (the
"Gross Up Payment") such that the net amount retained by Executive, after
deduction of any Excise Tax on the excess parachute payment and any
federal, state and local income and employment taxes (together with
penalties and interest) and Excise Tax upon the payment provided for by
this Subparagraph 9(c)(i), will be equal to the Parachute Amount.
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(ii) Applicable Rates. For purposes of determining the amount of
the Gross Up Payment, Executive will be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the calendar
year in which the Gross Up Payment is to be made and state and local income
and employment taxes at the highest marginal rates of taxation in the state
and locality of Executive's residence on the date of Executive's
Termination, net of the maximum reduction in federal income taxes that
could be obtained from deduction of such state and local taxes.
(iii) Determination of Gross Up Payment Amount. The determination
of whether the Excise Tax is payable and the amount thereof will be based
upon the opinion of tax counsel selected by Executive and approved by the
Employer, which approval will not be unreasonably withheld. If such opinion
is not finally accepted by the Internal Revenue Service (or state and local
taxing authorities), then appropriate adjustments to the Excise Tax will be
computed and additional Gross Up Payments will be made in the manner
provided by this Subparagraph (c).
(iv) Time For Payment. The Employer will pay the estimated amount
of the Gross Up Payment in cash to Executive concurrent with Employee's
Termination. Executive and the Employer agree to reasonably cooperate in
the determination of the actual amount of the Gross Up Payment. Further,
Executive and the Employer agree to make such adjustments to the estimated
amount of the Gross Up Payment as may be necessary to equal the actual
amount of the Gross Up Payment, which in the case of Executive will refer
to refunds of prior overpayments and in the case of the Employer will refer
to makeup of prior underpayments.
(c) DEFINITIONS. For purposes of this Paragraph 9, the following terms
shall have the following meanings:
"CHANGE IN CONTROL" shall have the meaning given it in the Xxxxxxx
Real Estate, Inc. 1993 Stock Option and Incentive Plan.
"COMPANY" shall mean not only Xxxxxxx Real Estate, Inc., but also
its successors by merger or otherwise.
"PARACHUTE AMOUNT" shall mean an amount equal to three (3) times the
sum of Executive's Average Base Salary and Average Incentive Compensation,
each as determined in Subparagraph 8(d)(i) (i.e. the "Parachute Amount"
shall mean an amount equal to 150% of the Severance Amount provided for in
Subparagraph 8(d)(i)).
"VOLUNTARY RESIGNATION" shall mean any termination of Executive's
employment by his own act, unless such termination is for Good Reason
occurring within ninety (90) days prior to, or at any time after, the
occurrence of a Change in Control.
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10. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
if to the Executive:
At his home address as shown
in the Company's personnel records;
if to the Company or Employer:
Xxxxxxx Real Estate, Inc.
00 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
---------
with a copy to the Chair of the Compensation Committee of the Board of
Directors at such place as notice of Directors' meetings is usually
given to the Director serving as such Chair;
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. MISCELLANEOUS. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, unless specifically
referred to herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Maryland (without regard to principles of
conflicts of laws).
12. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. The invalid portion of this Agreement, if any, shall be modified by any
court having jurisdiction to the extent necessary to render such portion
enforceable.
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13. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. ARBITRATION; OTHER DISPUTES. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
Chicago, Illinois, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. Notwithstanding the above, the Employer shall
be entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any continuation of any violation of Paragraph 5 or 6
hereof. Furthermore, should a dispute occur concerning Executive's mental or
physical capacity as described in Subparagraphs 7(b) or 8(b), a doctor selected
by Executive and a doctor selected by the Employer shall be entitled to examine
Executive. If the opinion of the Employer's doctor and Executive's doctor
conflict, the Employer's doctor and Executive's doctor shall together agree upon
a third doctor, whose opinion shall be binding. Any amount to which Executive
is entitled under this Agreement (including any disputed amount), which is not
paid when due, shall bear interest at a rate equal to the lesser of ten percent
(10%) per annum or the maximum lawful rate.
15. THIRD-PARTY AGREEMENTS AND RIGHTS. Executive represents to the Employer
that Executive's execution of this Agreement, Executive's employment with the
Employer and the performance of Executive's proposed duties for the Employer
will not violate any obligations Executive may have to any employer or other
party, and Executive will not bring to the premises of the Employer any copies
or other tangible embodiments of non-public information belonging to or obtained
from any such previous employment or other party.
16. LITIGATION AND REGULATORY COOPERATION. During and after Executive's
employment, Executive shall reasonably cooperate with the Employer in the
defense or prosecution of any claims or actions now in existence or which may be
brought in the future against or on behalf of the Employer which relate to
events or occurrences that transpired while Executive was employed by the
Employer; provided, however, that such cooperation shall not materially and
adversely affect Executive or expose Executive to an increased probability of
civil or criminal litigation. Executive's cooperation in connection with such
claims or actions shall include, but not be limited to, being available to meet
with counsel to prepare for discovery or trial and to act as a witness on behalf
of the Employer at mutually convenient times. During and after Executive's
employment, Executive also shall cooperate fully with the Employer in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while Executive was employed by the Employer. The Employer
shall also provide Executive with compensation on an hourly basis calculated at
his final base compensation rate for requested litigation and regulatory
cooperation that occurs after his termination of employment, and reimburse
Executive for all costs and expenses incurred in connection with his performance
under this Paragraph 16, including, but not limited to, reasonable attorneys'
fees and costs.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
XXXXXXX REAL ESTATE, INC.
By: /s/ Xxxx X. Xxxx, Xx.
-----------------------------
Title: Chair, Compensation Committee
XXXXXXX OPERATING LIMITED
PARTNERSHIP
By: XXXXXXX REAL ESTATE, INC.
------------------------------------
Its: General Partner
------------------------------------
By: /s/ Xxxx X. Xxxx, Xx.
------------------------------------
Title: Chair, Compensation Committee
/s/ Xxxxxx X. D'Arcy
------------------------------------------
Xxxxxx X. D'Arcy
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