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EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "AGREEMENT") is
entered into as of September 1, 1998, by and among Pacific Gulf Properties Inc.,
a Maryland corporation (the "COMPANY"), and Xxxxx X. Xxxxxxxxx ("EMPLOYEE").
WITNESSETH:
WHEREAS, the Company and Employee are parties to an Amended and Restated
Employment Agreement, entered into as of February 17, 1994, (the "PREDECESSOR
AGREEMENT"), pursuant to which Employee has served the Company as President and
Chief Executive Officer; and
WHEREAS, the Company desires to obtain the benefit of continued service
by Employee to the Company, and Employee desires to render services to the
Company; and
WHEREAS, the Board of Directors of the Company (the "BOARD") has
determined that because of Employee's substantial experience and business
relationships in connection with the business of the Company and the Company's
performance under the leadership of Employee, it is in best interest of the
Company to retain the services of Employee and to provide Employee certain
additional benefits; and
WHEREAS, the Company and Employee desire to set forth in this Agreement
the terms and conditions of Employee's future employment with the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree to terminate in its entirety the Predecessor
Agreement, and the parties further agree as follows:
1. TERM AND EXTENSIONS.
The Company agrees to employ Employee and Employee agrees to
serve the Company, in accordance with the provisions of this Agreement, for an
initial term commencing with an effective date of September 1, 1998 and ending
August 31, 2003; provided, however, that the term of Employee's employment under
this Agreement (the "EMPLOYMENT PERIOD") shall be extended automatically for one
(1) additional year on August 31 of each year during the term hereof, commencing
August 31, 1999, unless and until either party gives written notice to the other
at least ninety (90) days, and not more than one hundred twenty (120) days, in
advance of August 31 of any year during the Employment Period that such party
elects not to extend the Employment Period, in which event the Employment Period
shall thereafter remain at its then-current duration; provided, further,
however, that the Employment Period may be earlier terminated in accordance with
the express terms of this Agreement.
2. EMPLOYMENT.
(a) During the Employment Period, Employee shall be employed as
a senior executive officer of the Company with the title of President and Chief
Executive Officer or in such other executive position as the Board may from time
to time determine and which position is
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acceptable to Employee. In the performance of his duties, Employee agrees to
observe and comply with the rules and regulations of the Company as adopted by
the Board respecting the performance of Employee's duties and agrees to carry
out orders, directions and policies of the Company and the Board as they may be,
from time to time, communicated to Employee by the Board either orally or in
writing. The Company agrees that the duties which may be assigned to Employee
shall be the usual and customary duties of the offices(s) or position(s) to
which Employee may from time to time be appointed or elected and shall not be
inconsistent with the provisions of the charter documents of the Company or
applicable law.
(b) Employee shall have such corporate power and authority as
shall reasonably be necessary to enable Employee to discharge the duties and
responsibilities of any corporate office or position which Employee holds during
the Employment Period.
(c) Employee agrees to his employment as described in this
Section 2 and, subject to the provisions of Section 3 hereof, agrees to devote
substantially all of his business time and efforts to the business and affairs
of the Company. During the Employment Period, Employee agrees to (i) devote his
full and exclusive business time, energy and abilities exclusively to the
business, affairs and interests of the Company and its subsidiaries and matters
related thereto; (ii) serve the Company faithfully and to the best of his
ability; (iii) perform such services and duties in connection with the business,
affairs and operations of the Company as may be assigned or delegated to him
from time to time by or under, and in accordance with, the authority and
direction of the Board; and (iv) use his best efforts in the promotion and
advancement of the Company and its welfare.
3. NONCOMPETITION AGREEMENT.
The parties acknowledge that Employee's services to the Company
are essential and that Employee has access to the Company's confidential
information. Accordingly, Employee covenants and agrees that:
(a) During the Employment Period, Employee will be a full-time
employee of the Company as provided in Section 2 hereof and Employee will not,
without the express prior written consent of the Board:
(i) render services to any other person or firm for
compensation; or
(ii) directly or indirectly, engage, participate or
assist, as an employee, consultant, director, officer, agent, or as a
Significant Investor (as defined below), in any activity competitive with or
adverse to the business of the Company or its subsidiaries. Employee shall be
considered to be a "SIGNIFICANT INVESTOR" in any entity in which Employee owns
greater than 5% of the outstanding capital or equity securities, and any such
investment is referred to herein as a "SIGNIFICANT INVESTMENT."
(b) Notwithstanding any other provision of this Agreement that
may be construed to the contrary, Employee may make and manage personal business
investments of his choice (excluding Significant Investments in any entity
competitive with or adverse to the Company or its business) and serve in any
capacity with any civic, charitable or educational organization without seeking
or obtaining approval by the Board provided that such investments, activities,
and services do not
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substantially interfere or conflict with the performance of Employee's duties
under this Agreement or create any conflict of interest with respect to the
performance of such duties.
4. COMPENSATION.
(a) Base Salary.
During the Employment Period, the Company agrees to pay Employee
a base salary (the "BASE SALARY") at a rate of not less than $330,000 per year,
payable in equal twice monthly installments.
(b) Additional Benefits.
(i) During the Employment Period, Employee shall be
entitled to participate in, and to all rights and benefits provided by, the
Company's Retirement Income Plan, Thrift Plan, Deferred Income Plan, Health
Plan, Disability Plan, and in each and every other health, life, medical,
dental, disability, insurance and welfare plan maintained by the Company,
including, without limitation, automobile leasing and expense benefits for
Employee and the benefits contemplated by Section 6 hereof (collectively, the
"COMPANY'S BENEFIT PLANS"), that are maintained from time to time by the Company
for the benefit of Employee, the executives of the Company generally or for the
Company's employees generally, provided that Employee is eligible to participate
in such plan under the eligibility provisions thereof that are generally
applicable to the participants thereof.
(ii) During the Employment Period, Employee shall be
eligible for additional compensation in the form of a cash bonus, shares of
stock in the Company or stock options, and shall be eligible to participate in
the Company's 1993 Share Option Plan and any other stock option, incentive
compensation, profit participation, bonus or extra compensation plan that is
adopted by the Company and in which the Company's executive officers generally
participate (collectively, the "COMPANY'S AWARD Plans"). Awards, if any, made
under the Company's Award Plans shall be determined in the discretion of the
Compensation Committee of the Board of Directors (the "COMPENSATION COMMITTEE")
(iii) Employee's rights and benefits provided under the
Company's Benefit Plans and the Company's Award Plans are sometimes collectively
referred to herein as "ADDITIONAL BENEFITS."
(iv) Notwithstanding any other provision of this Agreement
that may otherwise be construed to the contrary, if any provision of this
Agreement conflicts with, is contrary to, or is inconsistent with any specific
eligibility or participation provision contained in any of the Company's Benefit
Plans or in any of the Company's Award Plans, the specific eligibility or
participation provision contained in such plan shall prevail over the
conflicting, contrary or inconsistent provisions contained in this Agreement.
(c) Periodic Review/Adjustment.
Employee's Base Salary and Additional Benefits shall be reviewed
no less frequently than once in every twelve month period commencing February
1999 by the Board and may be
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increased, but not decreased, during the Employment Period in light of
additional or modified responsibilities, if any, that may have been assigned or
assumed by Employee, the results of operations and prospects of the Company, and
current salaries and benefits then being paid to other persons holding similar
positions.
(d) Other Benefits. Until the termination of the Employment
Period, Employee shall be entitled to four (4) weeks of paid vacation during
each twelve month period commencing January 1, 1998, which shall accrue on a pro
rata basis. Vacation time shall continue to accrue so long as Employee's total
accrued and unused vacation time does not exceed eight (8) weeks. Should
Employee's total accrued and unused vacation time reach eight (8) weeks,
Employee will then cease to accrue any further vacation time until Employee's
accrued and unused vacation time falls below the eight (8) week level. Employee
shall also be entitled to all other benefits which are made available from time
to time to the executives of the Company pursuant to the Company's policies and
procedures.
(e) Continuation of Welfare Benefits. If Employee's employment
is terminated due to Employee's Total Disability (as defined in Section 5(c)
hereof) or if a Termination for Good Reason, a Termination Without Cause, or a
Change in Control Termination (as such terms are defined in Section 5 hereof)
occurs, and if Employee is no longer eligible to participate in one or more of
the Company's Benefit Plans because of such termination, Employee shall be
entitled to, and the Company shall provide to Employee at the Company's sole
expense, benefits substantially equivalent to those health, disability, life
insurance, accident insurance and all other benefits to which Employee was
entitled immediately prior to such termination for the periods specified in the
applicable provisions of Section 5 for the provision of such benefits.
(f) Overall Qualification. Nothing in this Agreement shall be
construed as preventing the Company from modifying, suspending, discontinuing or
terminating any of the Company's Benefit Plans or any of the Company's Award
Plans without notice or liability to Employee so long as (i) the modification,
suspension, discontinuation or termination of any such plan is authorized by and
performed in accordance with the specific provisions of such plan and (ii) such
modification, suspension, discontinuation or termination is taken generally with
respect to all similarly situated employees of the Company and does not single
out or discriminate against Employee.
5. TERMINATION.
(a) At-Will Employment. Employee's employment hereunder is "at
will" and may be terminated by Employee or the Company by written notice to the
other party at any time for any or no reason, in the case of the Company, by a
majority vote of all of the members of the Board, subject only to the provisions
specifically set forth in this Section 5. The date as of which Employee's
employment by the Company is terminated, whether such termination is initiated
by the Company or Employee, under the provisions of the applicable subsection of
this Section 5 is referred to herein as the "TERMINATION DATE." Except as
provided in Sections 5(c), (d), (f), (g) and (h) hereof, the Employment Period
shall expire on the Termination Date. Except as specifically otherwise provided
in this Section 5, in the Company's Benefit Plans, in the Company's Award Plans
or as otherwise required by law, all compensation and benefits to Employee under
this Agreement shall terminate on the Termination Date.
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(b) Termination On Account of Death of Employee. If Employee
dies during the Employment Period, the date of Employee's death shall be deemed
to be the Termination Date and the date of expiration of the Employment Period.
In such event, the Company shall have no further obligation to Employee or
Employee's estate, heirs or successors, except that the Company shall provide to
Employee (i) payment of Employee's unpaid Base Salary through the Termination
Date; (ii) payment at the Base Salary rate for Employee's accrued and unused
vacation time through the Termination Date; (iii) payment or distribution of all
benefits to be provided under each of the Company's Benefit Plans on account of
Employee's death; and (iv) payment or distribution of all benefits to be
provided on account of Employee's death under each of the Company's Award Plans.
Payments of the unpaid portion of Employee's Base Salary and for Employee's
accrued and unused vacation time shall be made to Employee's designated
beneficiaries or, if none, to Employee's estate in a lump sum in cash within
thirty (30) days from the time that claim is made therefor by such beneficiary
or estate.
(c) Termination On Account of Total Disability of Employee.
(i) If Employee suffers a Total Disability (as defined in
Section 5(c)(ii) hereof) during the Employment Period, Employee's employment
with the Company may be terminated at the option of the Company. Such
termination by the Company shall be by a written notice of termination from the
Company to the Employee or Employee's personal representative. The date of such
notice shall be the Termination Date. In such event, the Company shall have no
further obligation to Employee or Employee's estate, heirs or successors, except
that the Company shall provide to Employee (i) payment of Employee's unpaid Base
Salary through the Termination Date; (ii) payment at the Base Salary rate for
Employee's accrued and unused vacation time through the Termination Date; (iii)
payment monthly to Employee (or Employee's personal representative), commencing
on the Termination Date and for the entire period of Employee's Total Disability
until Employee attains age 65 or, if earlier, until the cessation of Employee's
Total Disability or Employee's death, of an amount equal to the difference of
(A) 60% of Employee's monthly Base Salary in effect at the Termination Date
minus (B) the aggregate amount Employee receives in respect of such month
pursuant to (x) any State Disability Insurance Plan and (y) any disability
income plan applicable to Employee that is maintained by the Company or any of
its subsidiaries; (iv) payment or distribution of all benefits arising by virtue
of such Total Disability under each of the Company's Benefit Plans and
continuation of Employee's participation (to the extent such participation is
possible under the laws then pertaining to such Plans) in the Company's Benefit
Plans and benefits thereunder for the entire period of Employee's Total
Disability until Employee attains age 65 or, if earlier, until the cessation of
Employee's Total Disability or Employee's death; and (v) payment or distribution
of all benefits to be provided under the Company's Award Plans in the event of
Employee's Total Disability.
(ii) For purposes of this Agreement, the term "TOTAL
DISABILITY" shall mean that Employee is unable to substantially perform all of
the material duties of his regular occupation on a full-time basis for a period
of ninety (90) consecutive days due to physical or mental infirmity as
determined by the Board in its reasonable judgment after consideration of a
written opinion by a physician who is board certified in the area of medicine
covering the cause of Employee's purported disability. Such physician shall be
one who is chosen by the Board and who is acceptable to Employee. Employee shall
not unreasonably withhold his acceptance to a proposed choice of
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physician by the Board. For purposes of this Agreement, Employee's Total
Disability shall in any event be deemed to have occurred if Employee becomes
entitled to receive benefits under the Company's group long term disability
plan.
(d) Termination by Employee for Good Reason. Employee's
employment hereunder may be terminated effective immediately by Employee by
written notice to the Board in the event of (i) a failure of the Board to elect
Employee to offices with the same or substantially the same duties and
responsibilities as set forth in Section 2 hereof; (ii) a failure by the Company
to comply with the provisions of Section 4 hereof; or (iii) a material breach by
the Company of any other provision of this Agreement (any such event being
referred to herein as "GOOD REASON"). A termination of employment by Employee
under this Section 5(e) is referred to herein as a "TERMINATION FOR GOOD
REASON." Notwithstanding a Termination for Good Reason, the Employment Period
shall be deemed to extend through the same expiration date as existed
immediately prior to such termination (without any extensions of such expiration
date after such employment termination). Upon a Termination for Good Reason, the
Company shall provide Employee with the benefits described in Section 5(g)
hereof.
(e) Termination by the Company for Cause or by Employee Without
Good Reason.
(i) If (A) Employee is terminated for Cause (as defined in
Section 5(e)(ii) hereof) prior to a Change in Control or (B) if Employee shall
voluntarily terminate his employment, and, in either case, such termination is
not a Termination for Good Reason or a Change in Control Termination (as defined
Section 5(h) hereof), such termination of employment shall be effective upon
delivery of notice by the terminating party to the other party, and the date of
such notice shall be the Termination Date and the date of expiration of the
Employment Period. In the event of such a termination of employment, Employee
shall be entitled to receive only his Base Salary at the rate then in effect
until the Termination Date and payment at the Base Salary rate for Employee's
accrued and unused vacation time through the Termination Date.
(ii) For purposes of this Agreement, "CAUSE" shall mean a
reasonable and documented finding by the Board prior to a Change in Control that
Employee has (i) acted with gross negligence or willful misconduct in connection
with the performance of his material duties hereunder; (ii) defaulted in the
performance of his material duties hereunder (other than a failure resulting
from Employee's death or incapacity due to physical or mental illness or from
assignment to Employee of duties that would constitute Good Reason) and has not
corrected such action within 15 days of receipt of written notice thereof; (iii)
acted against the best interests of the Company or committed a material act of
common law fraud against the Company or its employees, which act in either event
has had a material and adverse impact on the financial affairs of the Company;
or (iv) been convicted of a felony and such conviction has a material adverse
affect on the financial affairs of the Company; provided, however, that,
notwithstanding anything contained in this Agreement to the contrary, no act or
failure to act by Employee following a Change in Control constitute Cause for
purposes of this Agreement.
(f) Termination by the Company Without Cause. If Employee's
employment is terminated by the Company without Employee's consent and other
than for Cause, death, or disability and such termination is not a Change in
Control Termination (a "TERMINATION WITHOUT CAUSE"), such termination of
employment shall be effective upon delivery of notice by the Company to
Employee, and the date of such notice shall be the Termination Date.
Notwithstanding a Termination Without
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Cause, the Employment Period shall be deemed to extend through the same
expiration date as existed immediately prior to such termination (without any
extensions of such expiration date after such employment termination). Upon a
Termination Without Cause, the Company shall provide Employee with the benefits
described in Section 5(g) hereof.
(g) Benefits Upon Termination for Good Reason or a Termination
Without Cause. In the event of a Termination for Good Reason or a Termination
Without Cause, the Company shall provide Employee with the following benefits:
(i) The Company shall continue to pay Employee's Base
Salary for the remaining term of the Employment Period after the Termination
Date at the same rate, and on the same schedule of periodic payments, as that in
effect at the Termination Date; provided, however, that, if Employee so elects,
the Company shall pay to Employee in cash a lump sum representing the present
value of the aggregate unpaid Base Salary that would be payable over the
remainder of the Employment Period, discounted from the scheduled periodic
payment dates to a present value utilizing a discount rate of 8% per annum, in
lieu of Employee's right to continue to receive periodic payments of Employee's
Base Salary;
(ii) The Company shall pay Employee in cash at the Base
Salary rate for Employee's accrued and unused vacation time through the
Termination Date;
(iii) For the remaining term of the Employment Period,
Employee shall continue to receive all benefits under the Company's Benefit
Plans that Employee was receiving immediately prior to the Termination Date. For
purposes of the application of such benefits, Employee shall be treated as if he
had remained in the employ of the Company for the remainder of the Employment
Period with a Base Salary at the rate in effect on the Termination Date;
(iv) For purposes of each of the Company's Award Plans,
Employee shall be treated as if he had remained in the employ of the Company for
the remaining term of the Employment Period so that Employee may exercise any
exercisable stock options, receive any appropriate restricted stock awards and
continue to vest any rights during the remaining term of the Employment Period
with respect to each of the Company's Award Plans as if Employee's employment
with the Company had not terminated until the end of the Employment Period;
(v) If, in spite of the provisions above, benefits or
service credits under any of the Company's Benefit Plans or any of the Company's
Award Plans shall not be payable or provided under such plan to Employee, or to
Employee's dependents, beneficiaries or estate, because Employee is no longer
deemed to be an employee of the Company, the Company shall pay, or provide for
payment of, such benefits and service credits for such benefits to Employee, or
to Employee's dependents, beneficiaries or estate, for the remaining term of the
Employment Period; and.
(vi) Nothing herein shall be deemed to obligate Employee
to seek other employment in the event of any such termination and any amounts
earned or benefits received from any such other employment will not serve to
reduce in any way the amounts and benefits payable in accordance herewith.
(h) Termination After Change in Control.
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(i) If Employee's employment is terminated by the Company
or Employee for any or no reason within thirty-six (36) months following a
Change in Control (in either case, a "CHANGE IN CONTROL TERMINATION"), then the
Termination Date shall be the earlier of the specified date of employment
termination set forth in any written notice of termination by the Company or the
date of receipt by the Company of written notice of termination from Employee.
Upon such a Change in Control Termination, the Company shall provide Employee
with the following benefits:
(A) The Company shall pay Employee in cash
Employee's unpaid Base Salary through the Termination Date;
(B) The Company shall pay Employee in cash at the
Base Salary rate for Employee's accrued and unused vacation time through the
Termination Date;
(C) The Company shall pay Employee as severance pay
in a single cash payment an amount (the "SEVERANCE AMOUNT") equal to the product
of three (3) multiplied by the sum of (A) Employee's Base Salary in effect at
the Termination Date plus (B) the amount of the highest annual cash bonus paid
to Employee in respect of the five (5) fiscal years of the Company ended prior
to the Termination Date;
(D) The Company shall pay Employee the amounts
contemplated by Section 5(j) hereof;
(E) Employee shall immediately vest in any benefits
as are provided to vest pursuant to the provisions of each of the Company's
Benefit Plans and each of the Company's Award Plans in the event of a Change in
Control;
(F) All theretofore unvested stock options,
restricted options, restricted stock and other awards issued to Employee
pursuant to the Company's share option plan and any and all other stock option
or incentive plans shall immediately vest;
(G) All theretofore unvested employer contributions
in Employee's account pursuant to the Company's plan maintained under Section
401(k) of the Internal Revenue Code of 1986, as amended (the "CODE") shall
immediately vest, or the Company shall pay to Employee in cash the financial
equivalent thereof on an after-tax basis; and
(H) For a period of twenty-four (24) calendar months
commencing on the Termination Date (the "CONTINUATION PERIOD"), the Company
shall at its expense continue on behalf of Employee and Employee's dependents
and beneficiaries the medical, dental and hospitalization benefits, and life,
disability and accident insurance plan coverages, provided (A) to Employee at
any time during the 90-day period prior to the Change in Control or at any time
thereafter or (B) to other similarly situated executives who continue in the
employ of the Company during the Continuation Period; the coverage and benefits
(including deductibles and costs) provided in this Section 5(h) during the
Continuation Period shall be no less favorable to Employee and Employee's
dependents and beneficiaries than the most favorable of such coverages and
benefits during any of the periods referred to in clauses (A) and (B) above;
provided, however, that the Company's obligation hereunder with respect to the
foregoing benefits shall be limited to the extent that Employee obtains any such
benefits pursuant to a subsequent employer's benefit plans, in which case the
Company may
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reduce the coverage of any benefits it is required to provide Employee hereunder
as long as the aggregate coverages and benefits of the combined benefit plans is
no less favorable to Employee than the coverages and benefits required to be
provided hereunder; this Section 5(h) shall not be interpreted so as to limit
any benefits to which Employee, Employee's dependents or beneficiaries may be
entitled under any of the Company's employee benefit plans, programs or
practices following Employee's termination of employment, including without
limitation, retiree medical and life insurance benefits.
(ii) The amounts provided for in Sections 5(h)(i)(A)
through (C) shall be paid in a single lump sum cash payment within five (5) days
after the Termination Date (or earlier, if required by applicable law).
(iii) For purposes of this Agreement, "CHANGE IN CONTROL"
shall mean any of the following events:
(A) An acquisition of any securities of the Company
entitled to vote generally in the election of directors of the Company (the
"VOTING SECURITIES") by any "PERSON" (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 ACT")), immediately after which such Person has "BENEFICIAL OWNERSHIP"
(within the meaning of Rule 13d-3 promulgated under the 0000 Xxx) of twenty
percent (20%) or more of the combined voting power of the Company's then
outstanding Voting Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities that are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition that would cause a Change in Control. A "NON-CONTROL ACQUISITION"
shall mean an acquisition of Voting Securities of the Company by (w) an employee
benefit plan (or a trust forming a part thereof) maintained by (1) the Company
or (2) any corporation or other Person of which a majority of its voting power
or its equity securities or equity interests is owned directly or indirectly by
the Company (a "SUBSIDIARY"), (x) the Company or any Subsidiary, (y) any Person
as a result of a Non-Control Transaction (as hereinafter defined) or (z) a
Person directly from the Company (except that an acquisition by virtue of the
exercise of a conversion privilege shall not be considered within this clause
(z) unless the converted security was itself acquired directly from the
Company);
(B) The individuals who, as of the date hereof, are
members of the Board (the "INCUMBENT BOARD"), cease for any reason to constitute
at least a majority of the Board; provided, however, that if the election, or
nomination for election by the Company's stockholders, of any new director was
approved by a vote of at least two-thirds (2/3) of the Incumbent Board, such new
director shall be considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially became a director on the Board as a
result of either an actual or threatened "ELECTION CONTEST" (as described in
Rule 14a-11 promulgated under the 0000 Xxx) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board (a "PROXY CONTEST") including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest; or
(C) Approval by stockholders of the Company of:
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(x) A merger, consolidation or reorganization
involving the Company, unless, after giving effect to such merger, consolidation
or reorganization, all of the following criteria are met:
(1) the stockholders of the Company, as
constituted immediately prior to such merger, consolidation or reorganization,
own, directly or indirectly, immediately following such merger, consolidation or
reorganization, at least fifty percent (50%) of the combined voting power of the
outstanding Voting Securities of the corporation resulting from such merger,
consolidation or reorganization (the "SURVIVING CORPORATION") in substantially
the same proportion as their ownership of the Voting Securities of the Company
immediately prior to such merger, consolidation or reorganization;
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least a majority
of the members of the board of directors of the entity whose Voting Securities
are held directly by the former stockholders of the Company in satisfaction of
the criterion set forth in Section 5(h)(iii)(C)(x)(1) above; and
(3) no Person (other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any Subsidiary, or any
Person who, immediately prior to such merger, consolidation or reorganization,
had Beneficial Ownership of fifteen percent (15%) or more of the then
outstanding Voting Securities of the Company) owns, directly or indirectly,
fifteen percent (15%) or more of the combined voting power of the Surviving
Corporation's then outstanding Voting Securities.
A merger, consolidation or reorganization
meeting all of the criteria set forth in clauses (1) through (3) of this Section
5(h)(iii)(C)(x) is herein referred to as a "NON-CONTROL TRANSACTION;"
(y) A complete liquidation or dissolution of the
Company; or
(z) An agreement for the sale or other disposition
of all or substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because any Person (the "SUBJECT PERSON") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of by the Company of its own Voting
Securities which, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned by the Subject
Person; provided, however, that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition by the Company of its
own Voting Securities, and after such share acquisition by the Company the
Subject Person becomes the Beneficial Owner of any additional Voting Securities
of the Company that increases the percentage of the then outstanding Voting
Securities of the Company Beneficially Owned by the Subject Person, then a
Change in Control shall be deemed to have occurred.
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(D) Notwithstanding anything contained in this
Agreement to the contrary, if Employee's employment is terminated prior to a
Change in Control and Employee reasonably demonstrates that such termination (i)
was at the request of a Person that has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and that effectuates a
Change in Control or (ii) otherwise occurred in connection with, or in
anticipation of, a Change in Control that actually occurs, then for all purposes
of this Agreement, the date of a Change in Control with respect to Employee
shall mean the date immediately prior to the date of such termination of
Employee's employment, and such employment termination shall constitute a Change
in Control Termination.
(i) Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to Employee in any subsequent employment
except as otherwise expressly provided herein.
(j) Excise Tax Gross-Up.
(i) Notwithstanding anything contained in this Agreement
to the contrary, in the event it is determined (pursuant to Section 5(j)(ii)
below) or finally determined (as defined in Section 5(j)(iii)(C) below) that any
payment, distribution, transfer, benefit or other event with respect to the
Company or its predecessors, successors, direct or indirect subsidiaries or
affiliates (or any predecessor, successor or affiliate of any of them, and
including any benefit plan of any of them), to or for the benefit of Employee or
Employee's dependents, heirs or beneficiaries (whether such payment,
distribution, transfer, benefit or other event occurs pursuant to the terms of
this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 5(j)) (each a "PAYMENT" and collectively
the "PAYMENTS") is or was subject to the excise tax imposed by Section 4999 of
the Code, or any successor provision or any comparable provision of state or
local income tax law (collectively, "SECTION 4999"), or any interest, penalty or
addition to tax is or was incurred by Employee with respect to such excise tax
(such excise tax, together with any such interest, penalty or addition to tax,
herein collectively referred to as the "EXCISE TAX"), then, within ten (10) days
after such determination or final determination, as the case may be, the Company
shall pay to Employee an additional cash payment (hereinafter referred to as the
"GROSS-UP PAYMENT") in an amount such that after payment by Employee of all
taxes, interest, penalties and additions to tax imposed with respect to the
Gross-Up Payment (including, without limitation, any income and excise taxes
imposed upon the Gross-Up Payment), Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon such Payment or Payments. This
provision is intended to put Employee in the same position as Employee would
have been had no Excise Tax been imposed upon or incurred as a result of any
Payment.
(ii) Except as provided in Section 5(j)(iii) below, the
determination that a Payment is subject to an Excise Tax shall be made in
writing by a certified public accounting firm selected by Employee ("EMPLOYEE'S
ACCOUNTANT"). Such determination shall include the amount of the Gross-Up
Payment and detailed computations thereof, including any assumptions used in
such computations (the written determination of Employee's Accountant,
hereinafter, the "EMPLOYEE'S DETERMINATION"). Employee's Determination shall be
reviewed on behalf of the Company by a certified public accounting firm selected
by the Company (the "COMPANY'S ACCOUNTANT"). The
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Company shall notify Employee within ten (10) business days after receipt of
Employee's Determination of any disagreement or dispute therewith, and failure
to so notify within that period shall be considered an agreement by the Company
with Employee's Determination, and any agreement by the Company with Employee's
Determination shall obligate the Company to make payment as provided in Section
5(j)(i) above within ten (10) days from the expiration of such ten (10)
business-day period. In the event of an objection by the Company to Employee's
Determination, any amount not in dispute shall be paid within ten (10) days
following the ten (10) business-day period referred to herein, and with respect
to the amount in dispute Employee's Accountant and the Company's Accountant
shall jointly select a third nationally recognized certified public accounting
firm to resolve the dispute and the decision of such third firm shall be final,
binding and conclusive upon Employee and the Company. In such a case, the third
accounting firm's findings shall be deemed the binding determination with
respect to the amount in dispute, obligating the Company to make any payment as
a result thereof within ten (10) days following the receipt of such third
accounting firm's determination. All fees and expenses of each of the accounting
firms referred to in this Section 5(j) shall be borne solely by the Company.
(iii) (A) Employee shall notify the Company in writing of
any claim by the Internal Revenue Service (or any successor thereof) or any
state or local taxing authority (individually or collectively, the "TAXING
AUTHORITY") that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as soon as practicable but no
later than thirty (30) days after Employee receives written notice of such claim
and shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid; provided, however, that failure by Employee
to give such notice within such 30-day period shall not result in a waiver or
forfeiture of any of Employee's rights under this Section 5 except to the extent
of actual damages suffered by the Company as a result of such failure. Employee
shall not pay such claim prior to the expiration of the 15-day period following
the date on which Employee gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes, interest, penalties or
additions to tax with respect to such claim is due). If the Company notifies
Employee in writing prior to the expiration of such 15-day period that it
desires to contest such claim (and demonstrates to the reasonable satisfaction
of Employee its ability to make the payments to Employee that may ultimately be
required under this section before assuming responsibility for the claim),
Employee shall:
(w) give the Company any information reasonably
requested by the Company relating to such claim;
(x) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by the Company that is reasonably
acceptable to Employee;
(y) cooperate with the Company in good faith in
order effectively to contest such claim; and
(z) permit the Company to participate in any
proceedings relating to such claim; provided, however, that the Company shall
bear and pay directly all attorneys
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fees, costs and expenses (including additional interest, penalties and additions
to tax) incurred in connection with such contest and shall indemnify and hold
harmless Employee, on an after-tax basis, for all taxes (including, without
limitation, income and excise taxes), interest, penalties and additions to tax
imposed in relation to such claim and in relation to the payment of such costs
and expenses or indemnification. Without limitation on the foregoing provisions
of this Section 5, and to the extent its actions do not unreasonably interfere
with or prejudice Employee's disputes with the Taxing Authority as to other
issues, the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the Taxing Authority in
respect of such claim and may, at its sole option, either direct Employee to pay
the tax, interest or penalties claimed and xxx for a refund or contest the claim
in any permissible manner, and Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Employee to pay such
claim and xxx for a refund, the Company shall advance an amount equal to such
payment to Employee, on an interest-free basis, and shall indemnify and hold
harmless Employee, on an after-tax basis, from all taxes (including, without
limitation, income and excise taxes), interest, penalties and additions to tax
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; provided, further, however, that any extension of the
statute of limitations relating to payment of taxes, interest, penalties or
additions to tax for the taxable year of Employee with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount; and, provided, further, however, that any settlement of any claim shall
be reasonably acceptable to Employee and the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder, and Employee shall be entitled to settle or contest, as the
case may be, any other issue.
(B) If, after receipt by Employee of an amount
advanced by the Company pursuant to Section 5(j)(iii)(A), Employee receives any
refund with respect to such claim, Employee shall (subject to the Company's
complying with the requirements of Section 5(j)) promptly pay to the Company an
amount equal to such refund (together with any interest paid or credited thereon
after taxes applicable thereto), net of any taxes (including without limitation
any income or excise taxes), interest, penalties or additions to tax and any
other costs incurred by Employee in connection with such advance, after giving
effect to such repayment. If, after the receipt by Employee of an amount
advanced by the Company pursuant to Section 5(j)(iii)(A), it is finally
determined that Employee is not entitled to any refund with respect to such
claim, then such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall be treated as a Gross-Up Payment and
shall offset, to the extent thereof, the amount of any Gross-Up Payment
otherwise required to be paid.
(C) For purposes of this Section 5(j), whether the
Excise Tax is applicable to a Payment shall be deemed to be "finally determined"
upon the earliest of: (w) the expiration of the 15-day period referred to in
Section 5(j)(iii)(A) above if the Company has not notified Employee that it
intends to contest the underlying claim, (x) the expiration of any period
following which no right of appeal exists, (y) the date upon which a closing
agreement or similar agreement with respect to the claim is executed by Employee
and the Taxing Authority (which agreement may be executed only in compliance
with this Section 5(j)), and (z) the receipt by Employee of notice from the
Company that it no longer seeks to pursue a contest (which notice shall be
deemed received if the
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Company does not, within fifteen (15) days following receipt of a written
inquiry from Employee, affirmatively indicate in writing to Employee that the
Company intends to continue to pursue such contest).
(iv) As a result of uncertainty in the application of
Section 4999 that may exist at the time of any determination that a Gross-Up
Payment is due, it may be possible that in making the calculations required to
be made hereunder, the parties or their accountants shall determine that a
Gross-Up Payment need not be made (or shall make no determination with respect
to a Gross-Up Payment) that properly should be made ("UNDERPAYMENT"), or that a
Gross-Up Payment not properly needed to be made should be made ("OVERPAYMENT").
The determination of any Underpayment shall be made using the procedures set
forth in Section 5(j)(ii) above and shall be paid to Employee as an additional
Gross-Up Payment. The Company shall be entitled to use procedures similar to
those available to Employee in Section 5(j)(ii) to determine the amount of any
Overpayment (provided that the Company shall bear all costs of the accountants
as provided in Section 5(j)(ii)). In the event of a determination that an
Overpayment was made, any such Overpayment shall be treated for all purposes as
a loan to Employee with interest at the applicable Federal rate provided for in
Section 1274(d) of the Code; provided, however, that the amount to be repaid by
Employee to the Company shall be subject to reduction to the extent necessary to
put Employee in the same after-tax position as if such Overpayment were never
made.
6. BUSINESS EXPENSES.
During the term of this Agreement, to the extent that such
expenditures satisfy the criteria for federal income tax purposes as ordinary
and necessary business expenses, whether or not fully deductible by the Company,
the Company shall reimburse Employee promptly for reasonable business
expenditures, including travel, entertainment, parking, business meetings, and
professional dues. In addition, whether or not such expenditures satisfy
criteria for federal income tax purposes for deductibility, the Company shall
reimburse Employee promptly for the costs of (or dues associated with)
maintaining club memberships approved by the Compensation Committee. All such
expenditures shall be made and substantiated in accordance with policies,
practices and procedures established from time to time by the Board and shall be
incurred in pursuit and furtherance of the Company's business and goodwill.
7. INDEMNITY.
To the fullest extent permitted by applicable law and the bylaws
of the Company as from time to time in effect, the Company shall indemnify
Employee and hold Employee harmless from and against any acts or decisions made
in good faith while performing services for the Company, and the Company shall
use its best efforts to obtain coverage for Employee (provided the same may be
obtained at reasonable cost) under any liability insurance policy or policies
now in force or hereafter obtained during the term of this Agreement that cover
other officers of the Company having comparable or lesser status and
responsibility. To the same extent, the Company will pay and, subject to any
legal limitations, advance all expenses, including reasonable attorneys' fees
and costs of court approved settlements, actually and necessarily incurred by
Employee in connection with the defense of any action, suit or proceeding and in
connection with any appeal thereon, which has been brought
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against Employee by reason of Employee's services as an officer, employee or
agent of the Company or of a subsidiary of the Company or performance by
Employee at the request of the Company.
8. REMEDIES FOR BREACH.
(a) Employee's Breach. If Employee materially breaches any of
the terms of this Agreement, in addition to any other remedies which it may
have, the Company may terminate Employee's employment and any further
participation in any of the Company's Benefit Plans and Award Plans in
accordance with employment policies of the Company as in effect from time to
time, and Employee shall forfeit any further compensation. Employer's exercise
of its right to terminate shall be without prejudice to any other right or
remedy to which it may be entitled at law, in equity or under this Agreement. In
addition, the provisions of this Agreement may be specifically enforced against
Employee if not performed according to their terms. Without limiting the
generality of the foregoing, the parties acknowledge that the Company would be
irreparably damaged and there would be no adequate remedy at law for Employee's
breach of Sections 3 and 9 hereof and, accordingly, Employee hereby consents to
the entry of any temporary order or preliminary or ex parte injunction, in
addition to any other remedies available at law or in equity, to enforce the
provisions thereof. This Section shall survive the termination of this
Agreement.
(b) Company's Breach. Employee agrees that the payments
expressly provided and contemplated by this Agreement shall constitute the sole
and exclusive obligation of Employer if Company breaches any provision of this
Agreement or terminates Employee's employment during the Employment Period for
any reason and that the payment thereof shall be the sole and exclusive remedy
for any termination of Employee's employment. Employee covenants not to assert
or pursue any other remedies, at law or in equity, with respect to any
termination of employment.
9. RECORDS AND NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Employee agrees to not make use of, divulge or otherwise
disclose, directly or indirectly, any trade secret or other confidential or
proprietary information concerning the business (including but not limited to
its products, employees, services, practices or policies) of the Company or any
of its affiliates of which Employee may learn or be aware as a result of
Employee's employment during the term of this Agreement, except to the extent
such use of disclosure is (i) necessary to the performance of this Agreement and
in furtherance of the Company's best interests, (ii) required by applicable law,
(iii) lawfully obtainable from other sources, or (iv) authorized in writing by
the Company.
(b) Employee, prior to and during the term of employment, has
had and will have access to and become acquainted with various trade secrets,
consisting of software, plans, customer lists, contracts, and compilations of
information, records and specifications, that are owned by the Company and
regularly used in the operation of its businesses and that may give the Company
an opportunity to obtain an advantage over competitors who do not know or use
such trade secrets. Employee agrees and acknowledges that Employee has been
granted access to these valuable trade secrets only by virtue of the
confidential relationship created by Employee's employment. Employee shall not
disclose any of the aforesaid trade secrets, directly or indirectly, or use them
in any way,
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either during the term of this Agreement or at any time thereafter, except as
required in the course of employment by the Company and for its benefit.
(c) All records, files, documents, software, equipment, and
similar items relating to the business of the Company or its affiliates,
including without limitation all records relating to customers (the
"DOCUMENTS"), whether prepared by Employee or otherwise coming into Employee's
possession, shall remain the exclusive property of the Company or such
affiliates. Upon termination of employment, Employee agrees to promptly deliver
to the Company all Documents in the possession or under the control of Employee.
(d) Employee agrees to comply with and be bound by the Company's
Policy on Securities Trading and Disclosure of Confidential Information
incorporated herein by this reference as if set forth in full.
(e) The agreements set forth in this Section 9 shall survive the
expiration of the Employment Period and any termination of this Agreement.
10. MISCELLANEOUS.
(a) Succession; Survival.
This Agreement shall inure to the benefit of and shall be
binding upon the Company, its successors and assigns, but without the prior
written consent of Employee this Agreement may not be assigned other than in
connection with a merger or sale of substantially all the assets of the Company
or a similar transaction in which the successor or assignee assumes (whether by
operation of law or express assumption) all obligations of the Company hereunder
including without limitation those in Section 4 hereof in respect of such
successor or assignee. The obligations and duties of Employee hereunder are
personal and otherwise not assignable. The Company shall require any successor
of the Company that shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets of
the Company, by an agreement in form and substance satisfactory to Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent as the Company would be to perform if no such succession had
taken place. Employee's obligations and representations under this Agreement
will survive the termination of Employee's employment, regardless of the manner
of such termination.
(b) Notices.
Any notice or other communication provided for in this Agreement
shall be in writing and sent, if to the Company, to its principal office at:
0000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000-0000
Attention: Chairman of the Compensation
Committee of the Board of Directors
or at such other address as the Company may from time to time in writing
designate, and if to Employee, at such address as Employee may from time to time
in writing designate (or Employee's
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business address of record in the absence of such designation). Each such notice
or other communication shall be effective (i) if given by telecommunication,
when transmitted to the applicable number so specified in (or pursuant to) this
Section 10(b) and an appropriate answer back is received; (ii) if given by mail,
three (3) days after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid; or (iii) if given by any other
means, when actually delivered at such address.
(c) Entire Agreement; Amendments.
This Agreement taken together with the current provisions of
each of the Company's Benefit Plans, including, without limitation, the Exchange
Agreement between the Company and Employee effective as of April 15, 1995 and
the Restricted Stock Award Agreement between the Company and Employee effective
as of April 15, 1995, and each of the Company's Award Plans contain the entire
agreement of the parties relating to the subject matter hereof and supersede any
prior agreements, undertakings, commitments and practices relating to Employee's
employment by the Company. No amendment or modification of the terms of this
Agreement shall be valid unless made in writing and signed by Employee and, on
behalf of the Company, by an officer expressly so authorized by the Board.
(d) Waiver.
No failure on the part of any party to exercise or delay in
exercising any right hereunder shall be deemed a waiver thereof or of any other
right, nor shall any single or partial exercise preclude any further or other
exercise of such right or any other right.
(e) Choice of Law; Construction.
This Agreement, the legal relations between the parties and any
action, whether contractual or non-contractual, instituted by any party with
respect to matters arising under or growing out of or in connection with or in
respect of this Agreement, the relationship of the parties or the subject matter
hereof shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts made and performed in such State and
without regard to conflicts of law doctrines, to the extent permitted by law.
The headings and subheadings of the sections and subsections of this Agreement
are for reference purposes only and shall not affect in any way the meaning,
construction or interpretation of the terms of this Agreement. Neither party
hereto nor its respective counsel shall be deemed the drafter of this Agreement,
and this Agreement shall be construed in accordance with its fair meaning and
not strictly for or against either party.
(f) Arbitration.
Any dispute, controversy or claim arising out of or in respect
of this Agreement (or its validity, interpretation or enforcement.), the
employment relationship or the subject matter hereof shall at the request of
either party be submitted to and settled by arbitration conducted before a
single arbitrator in Newport Beach, California in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration shall
be governed by the Federal Arbitration Act (9 U.S.C. Sections 1-16). The
arbitration of such issues, including the determination of any amount of damages
suffered, shall be final and binding upon the parties to the maximum extent
permitted by law. The
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arbitrator in such action shall not be authorized to change or modify any
provision of this Agreement. Judgment upon the award rendered by the arbitrator
may be entered by any court having jurisdiction thereof. The arbitrator shall
award reasonable expenses (including reimbursement of the assigned arbitration
costs) to the prevailing party upon application therefor.
(g) Place of Employment.
The principal place of employment and the location of Employee's
principal office shall be in Orange County, California or such other place
within a reasonable commuting distance therefrom as shall be mutually agreed
upon by Employee and the Company; provided, however, that Employee will be
expected to engage in periodic travel within and outside the State of California
as the Company may reasonably request or as may be required for the proper
rendition of services hereunder.
(h) Severability.
If this Agreement shall for any reason be or become
unenforceable in any material respect by any party, this Agreement shall
thereupon terminate and become unenforceable by the other party as well. In all
other respects, if any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall nevertheless remain in full
force and effect and such invalid or unenforceable provisions shall be limited
or modified (consistent with its general intent) to the extent necessary so that
it shall be valid, legal and enforceable, or if it shall not be possible to so
limit or modify such invalid, illegal or unenforceable provision or part of a
provision, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or part of a provision had never been contained herein,
and the parties will use their best efforts to substitute a valid, legal and
enforceable provision that, insofar as practicable, implements the purpose and
intent of the provision or part of such provision originally contained herein.
If any provision is held invalid or unenforceable with respect to particular
circumstances it shall nevertheless remain in full force and effect in all other
circumstances, to the fullest extent permitted by law.
(i) Withholding; Deductions.
All compensation payable hereunder, including salary and other
benefits, shall be subject to applicable taxes, withholding and other required,
normal or elected employee deductions.
(j) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Amended and Restated Employment Agreement as the date first above written.
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THE "COMPANY"
PACIFIC GULF PROPERTIES INC.
By______________________________________
Its_____________________________________
"EMPLOYEE"
________________________________________
Xxxxx X. Xxxxxxxxx
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