AMENDMENT TO
EMPLOYMENT AGREEMENT
The EMPLOYMENT AGREEMENT (the "Agreement"), dated as of March 21, 2002, by
and between Prime Retail, Inc., a Maryland corporation ("Prime"), and the sole
general partner of Prime Retail, L.P., a Delaware limited partnership (the
"Operating Partnership"), and R. Xxxxxx Xxxxxx (the "Executive"), is amended by
this Amendment, effective June 6, 2002 (unless otherwise noted herein) in the
following respects:
1. Section 2 of the Agreement is hereby deleted in its entirety and
replaced with the following:
2. Term.
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The term of this Agreement, unless earlier terminated in
accordance with the terms of this Agreement, will extend to
June 6, 2005 (the "Original Term"); provided, however, that if
this Agreement is not affirmatively terminated by either
party, or extended or renewed for a specific duration in
writing by agreement of the parties, prior to the last day of
the Original Term, this Agreement will continue on a
month-to-month basis thereafter (the "Extended Term"). The
parties agree to cooperate and discuss in good faith their
intentions with regard to this Agreement's extension or
renewal 12 months prior to the end of the Original Term.
Notwithstanding the foregoing, the Company agrees to provide
Executive with a minimum of six months' advance written notice
of its intent to terminate this Agreement during the Original
Term or the Extended Term for any reason other than Cause, in
which case the Company shall comply with the notice
requirements of Sections 4(a)(2) and (3) hereof, and Executive
agrees to provide the Company with a minimum of 60 days'
advance written notice of his intent to terminate this
Agreement during the Original Term or the Extended Term for
any reason other than Good Reason, in which case Executive
shall comply with the notice requirements of Section
4(b)(1)(E) hereof. The Original Term and any Extended Term of
this Agreement shall end only following termination by written
notice by the Company or Executive in accordance with this
Section. For purposes of this Agreement, the terms "Original
Term" and "Extended Term" shall herein be collectively
referred to as the "Term."
2. Section 3(a) of the Agreement is hereby deleted in its entirety and
replaced with the following:
(a) Base Salary. For the period beginning June 10, 2002 and
extending throughout the Term of this Agreement, the Operating
Partnership agrees to pay to Executive a base salary in an
aggregate amount of $250,000 per calendar year, payable in
accordance with the general policies and procedures for
payment of salaries to any other executive personnel of the
Company but in all events payable no less frequently than
monthly. The then applicable amount of yearly base salary
payable to Executive pursuant to the provisions of this
Section 3(a) shall herein be referred to as the "Base Salary."
The Base Salary payable to Executive pursuant to the
provisions of this Section 3(a) shall be subject to periodic
review by the Compensation Committee of the Board of Directors
of Prime (the "Committee") based upon periodic review of
Executive's performance conducted on at least an annual basis
and may be periodically increased as a result thereof;
provided, however, that the Base Salary payable to Executive
pursuant to the provisions of this Section 3(a) shall in no
event be less than the aggregate amount set forth in the first
sentence of this paragraph. In no event may Executive's Base
Salary be reduced during the Term without his express written
consent.
3. The last sentence of Section 3(b), "Performance Bonus," is hereby
deleted in its entirety and replaced with the following:
Any amount of Performance Bonus required to be paid to
Executive for a calendar year during the Term of this
Agreement shall be paid by the Company to Executive on the
earlier of (x) the pay period of the Company following
finalization of the audit for such calendar year and final
review and approval of the bonus calculation by the Committee
or (y) February 28 (or the next business day) of the year
immediately following the end of the calendar year for which
such Performance Bonus is attributable.
4. A new Section 3(g) is hereby added to the Agreement as follows:
(g) Stock Options. As additional consideration for Executive's
employment hereunder, as of June 6, 2002 (the "Date of
Grant"), Prime granted Executive an option (the "Option") to
purchase 250,000 shares of Prime's common stock, par value
$0.01 per share (the "Common Stock"). The purchase price per
share was $0.11 (the "Exercise Price"). The Option is subject
to the terms and conditions contained in the Stock Award
Agreement entered into between Prime and Executive, which
terms include: (i) the Option will have a term of ten years
measured from the date of grant; (ii) the greatest portion of
the Option shares allowable will be issued as incentive stock
options (as determined on a prorated basis for all recipients
of option awards on June 6, 2002); (iii) the Option shares
will vest and become exercisable as follows: 1/3 will vest
upon the first anniversary of the Date of Grant, 1/3 will vest
upon the second anniversary of the Date of Grant, and 1/3 will
vest upon the third anniversary of the Date of Grant, assuming
Executive's employment with Prime continues through such
dates; (iv) the Option will remain exercisable for 30 days
following termination of Executive for Cause, and in the event
of Executive's termination of employment for any other reason
the Option will remain exercisable for 90 days; and (v) upon
Executive's resignation for Good Reason or termination without
Cause (each as herein defined and without regard to whether a
Change of Control has occurred) during the Term of this
Agreement, the entire Option, in addition to all other
outstanding options awarded by Prime to Executive, will become
fully vested and exercisable, to the extent not previously
exercised. Prime will take all steps necessary to ensure that
all options held by Executive survive any Change of Control.
5. Subparagraph 4(d)(2) of the Agreement is hereby deleted in its entirety
and replaced with the following:
(2) a termination payment in an amount equal to two times the
One-Year Pay Equivalent, which amount shall be payable within
thirty (30) days of the effective date of termination;
6. The following sentence is hereby added at the end of Section 4(d):
The termination benefits pursuant to subsections (a) to (d) of
this Section 4 are mutually exclusive, and Executive shall not
be entitled to seek termination benefits under more than one
such subsection (other than as described in the last paragraph
of Section 4(a)(1)).
7. This Amendment may be executed in one or more counterparts which taken
together shall constitute one and the same instrument.
EXECUTIVE:
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R. Xxxxxx Xxxxxx
PRIME RETAIL, INC., a Maryland corporation PRIME RETAIL, L.P., a Delaware
limited partnership
By:___________________________ By: Prime Retail, Inc.
Name:_________________________ Its: Sole General Partner
Title:________________________ By:____________________________
Name:__________________________
Title:_________________________
