SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of June 26, 2002, by and among GLIMCHER REALTY
TRUST, a Maryland real estate investment trust, with offices at 00 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx, Xxxx 00000 ("GRT"), GLIMCHER PROPERTIES LIMITED PARTNERSHIP, a
Delaware limited partnership, with offices at 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx,
Xxxx 00000 ("GPLP"), and Xxxxxx X. Drought, Jr., an individual residing at 0000
Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000 (the "Executive").
WHEREAS, GRT, GPLP and/or their subsidiaries and affiliates, including
entities in which GRT or GPLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services for and on
behalf of the Company upon terms and conditions upon which the Company and the
Executive have previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's contributions to
the future growth of the Company will be substantial; and
WHEREAS, to induce the Executive to remain in the employ of the
Company, the parties hereto desire to set forth certain severance benefits which
GPLP will pay to the Executive in the event of a Change in Control of GRT (as
defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and shall
terminate upon the earlier of (a) the date on which GPLP and GRT have satisfied
all of their obligations hereunder or (b) the date on which the Executive is no
longer an employee of the Company for any reason whatsoever including, without
limitation, termination without cause. Notwithstanding the termination of this
Agreement subsequent to a Change in Control of GRT, in the event that the
Executive is an employee of the Company at the moment immediately prior to a
Change in Control of GRT, the Executive shall be entitled to receive all
benefits described hereunder and the provisions hereof related thereto shall
survive such termination.
2. CHANGE IN CONTROL OF GRT. For purposes of this Agreement, a "Change
in Control of GRT" shall be deemed to occur if:
(i) there shall have occurred a change in control of a nature
that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date hereof, whether or not GRT is then subject to such reporting
requirement; provided, however, that there shall not be deemed to be a
Change in Control of GRT if immediately prior to the occurrence of what
would otherwise be a Change in Control of GRT (a) the Executive is the
other party to the transaction (a "Control of GRT Event") that would
otherwise result in a Change in Control of GRT or
(b) the Executive is an Executive officer, trustee, director or more
than 5% equity holder of the other party to the Control of GRT Event or
of any entity, directly or indirectly, controlling such other party;
(ii) GRT merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a
"Transaction"); provided, however, that a Transaction shall not be
deemed to result in a Change in Control of GRT if (a) immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist or (b) (1)
the shareholders of GRT, immediately before such transaction, own,
directly or indirectly, immediately following such Transaction in
excess of fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting
securities of GRT immediately before such Transaction and (2) the
individuals who were members of GRT's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of directors
or the board of trustees, as the case may be, of the Surviving
Corporation, or of a corporation or other entity beneficially, directly
or indirectly, owning a majority of the outstanding voting securities
of the Surviving Corporation; or
(iii) GRT acquires assets of another company or a subsidiary
of GRT merges or consolidates with another company (each an "Other
Transaction") and (a) the shareholders of GRT, immediately before such
Other Transaction own, directly of indirectly, immediately following
such Other Transaction fifty percent (50%) or less of the combined
voting power of the outstanding voting securities of the corporation or
other entity resulting from such Other Transaction (the "Other
Surviving Corporation") in substantially the same proportion as their
ownership of the voting securities of GRT immediately before such Other
Transaction or (b) the individuals who were members of GRT's Board of
Trustees immediately prior to the execution of the agreement providing
for such Other Transaction constitute less than a majority of the
members of the board of directors or board of trustees, as the case may
be, of the Other Surviving Corporation, or of a corporation or other
entity beneficially, directly or indirectly, owing a majority of the
outstanding voting securities of the Other Surviving Corporation;
provided, however, that an Other Transaction shall not be deemed to
result in a Change in Control of GRT if immediately prior thereto the
circumstances in (i)(a) or (i)(b) above exist.
3. COMPENSATION UPON A CHANGE IN CONTROL OF GRT. If the Executive is an
employee of the Company at the moment immediately prior to a Change in Control
of GRT, the Executive shall be entitled to receive the compensation and benefits
set forth below.
(a) GPLP shall pay to the Executive, not later than the date of any
Change in Control of GRT, unless otherwise agreed to in writing, a lump sum
severance payment (the "Severance Payment") equal to two (2) times the Base
Amount (as defined below). For purposes of this Section 3(a), the Base Amount
shall mean the Executive's annual compensation during the calendar year period
preceding the calendar year in which the Change in Control of GRT occurs.
For purposes of determining annual compensation in this Section 3(a), there
shall be included (i) all base salary and bonuses paid or payable to the
Executive by the Company with respect to the preceding calendar year; (ii) all
grants of restricted common shares of beneficial interest of GRT (the "Shares"),
if any, with respect to such preceding calendar year, which Shares shall be
valued based on their date of grant at the then Fair Market Value (as defined in
Section of 7.2 of GRT's 1993 Employee Share Option Plan, 1993 Trustee Share
Option Plan or 1997 Incentive Plan, as the case may be, or any other plan or
agreement pursuant to which they are issued) and (iii) the fair market value of
any other property or rights given or awarded to the Executive by the Company
with respect to such preceding calendar year, or partial first year of
employment.
(b) Any Shares now or hereafter issued to the Executive pursuant to any
restricted Share grant shall vest on the day immediately prior to the date of a
Change in Control of GRT and no longer be subject to repurchase or any other
forfeiture restrictions.
(c) GRT and GPLP shall cause the Company to maintain in full force and
effect for the Executive's continued benefit for eighteen (18) months following
a Change in Control of GRT, all life, accident, medical and dental insurance
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of a Change in Control of GRT,
provided that the Executive's continued participation is allowable under the
general terms and provisions of such plans and programs and provided, further,
that in the event that the Executive becomes employed by any third party during
such 18-month period, then upon the date of such employment the Executive shall
no longer be entitled to any accident, medical or dental insurance benefits
described in the preceding clause. Subject to the preceding sentence, in the
event that the Executive's participation in any such plan or program is barred,
GRT and GPLP shall arrange to cause the Company to provide the Executive with
benefits substantially similar to those which the Executive was entitled to
receive under such plans and programs. Subject to the first sentence of this
paragraph, at the end of the period of coverage, the Executive shall have the
option to have assigned to him at no cost to the Executive and with no
apportionment of prepaid premiums, any assignable insurance policy owned by the
Company and relating specifically to the Executive.
(d) All options to purchase Shares now or hereafter granted to the
Executive shall vest on the day immediately prior to the date of a Change in
Control of GRT and become fully exercisable in accordance with their terms.
(e) The Executive shall not be required to mitigate the amount of any
payment provided for in this Section 3 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Section 3 be
reduced by any compensation earned by him as the result of employment by another
employer or by retirement benefits after the date of termination, or otherwise,
except as specifically provided in this Section 3.
4. ADDITIONAL AMOUNT. Whether or not Section 3 hereof is applicable, if
in the opinion of tax counsel selected by the Executive and reasonably
acceptable to the Company, the Executive has or will receive any compensation or
recognize any income (whether or not pursuant to this Agreement or any plan or
other arrangement of the Company and whether or not the Executive's employment
with the Company has terminated) which constitutes an "excess of parachute
payment" within the meaning of Section 280G(b)(1) of the Internal Revenue Code
of
1986, as amended (the "Code") (or for which a tax is otherwise payable under
Section 4999 of the Code), then GPLP shall pay the Executive an additional
amount (the "Additional Amount") equal to the sum of (i) all taxes payable by
the Executive under Section 4999 of the Code with respect to all such excess
parachute payments (or otherwise) including, without limitation, the Additional
Amount, plus (ii) all Federal, state and local income taxes for which the
Executive may be liable with respect to the Additional Amount. The amounts
payable pursuant to this Section 4 shall be paid by GPLP to the Executive not
later than the date of any Change in Control of GRT, unless otherwise agreed to
in writing.
5. EXPENSES. GPLP shall pay or reimburse the Executive, as the case may
be, for all legal fees and related expenses (including the costs of experts,
evidence and counsel) paid by the Executive as a result of (i) the Executive
seeking to obtain or enforce any right or benefit provided by this Agreement or
(ii) any action taken by the Company against the Executive in enforcing its
rights hereunder; provided, however, that GPLP shall reimburse the legal fees
and related expenses described in Section 5 only if and when a final judgment
has been rendered in favor of the Executive and all appeals related to any such
action have been exhausted.
6. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained herein shall
confer upon the Executive the right to continue in the employment or service of
the Company or affect any right that the Company may have to terminate the
employment or service of the Executive at any time for any reason.
7. GRT GUARANTY. GRT guarantees the satisfaction of all obligations of,
and the full and prompt payment of all amounts payable by GPLP hereunder. In
addition, GRT guarantees the satisfaction of all obligations of the Company
hereunder.
8 GOVERNING LAW; ARBITRATION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Maryland, without
regard to Maryland's conflicts of law principles. Any dispute or controversy
arising under this Agreement, or out of the interpretation hereof, or based upon
the breach hereof, shall be resolved by arbitration held at the offices of the
American Arbitration Association in The Commonwealth of Pennsylvania, in the
City of Philadelphia, in accordance with the rules and regulations of such
association prevailing at the time of the demand for arbitration by either party
hereto; provided, however, that the arbitrator or arbitrators shall only have
the power and authority to interpret, and not modify or amend, the terms and
provisions hereof. Judgment upon an award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof.
Notwithstanding anything contained in this Section 8, either party shall have
the right to seek preliminary injunctive relief in any court in the City of
Philadelphia in aid of (and pending the final decision) the arbitration
proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and is intended to supersede all prior negotiations, understandings
and agreements with respect to the subject matter hereof. No provision of this
Agreement may be waived or changed, except by a writing signed by the party to
be charged with such waiver or change.
10. SUCCESSORS; BINDING AGREEMENT. This shall inure to the benefit of,
be binding upon and enforceable by GRT and GPLP, their successors and assigns,
and the
Executive and the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
11. NOTICES. All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same. All notices shall
be deemed to have been given as of the date of personal delivery, transmittal or
mailing thereof.
12. SEVERABILITY. If any provision in this Agreement is determined to
be invalid, it shall not affect the validity or enforceability of any of the
other remaining provisions hereof.
13. GRT EXCULPATION. This Agreement and all documents, agreements,
understandings and arrangements relating to the matters described herein have
been executed by the undersigned representative of GRT in his/her capacity as an
officer or trustee of GRT which has been formed as a Maryland real estate
investment trust pursuant to the Amended and Restated Declaration of Trust of
GRT, as amended, and not individually, and neither the trustees, officers or
shareholders of GRT shall be bound or have any personal liability hereunder or
thereunder. The Executive shall look solely to the assets of GRT for
satisfaction of any liability of GRT in respect to this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of the
trustees, officers or shareholders or GRT or any of their personal assets for
the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GLIMCHER REALTY TRUST
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx, President
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
BY: GLIMCHER PROPERTIES CORPORATION,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
EXECUTIVE:
/s/ Xxxxxx X. Drought, Jr.
--------------------------------
Xxxxxx X. Drought, Jr.
