Exhibit 10.32
March 22, 2002
Xx. Xxxxxx X. Xxxxxxx
c/o Security Capital Group Incorporated
000 Xxxxxxx Xxxxxx
Xxxxx Xx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxxx:
As you know, Security Capital Group, Inc.(the "Company") has
agreed to merge with an indirect subsidiary of General Electric Capital
Corporation ("GE Capital") pursuant to the terms of an Agreement and Plan of
Merger, dated as of December 14, 2001, by and among the Company, GE Capital and
EB Acquisition Corp. (the "Merger Agreement"). (Capitalized terms not otherwise
defined in this Agreement shall have the meaning assigned to them in the Merger
Agreement). The Company desires to continue your employment in order to avail
itself of your expertise, knowledge and experience with respect to matters
relating to the Company and its business and to assist in the integration of the
Company and GE Capital. Subject to the terms and conditions set forth below, we
are pleased to offer you employment with the Company after the Merger as
follows:
1. Termination of, and Waiver of Payment Under, the Change in
Control Agreement and Term Sheet. As of the date hereof, all of your and all of
the Company's and GE Capital's rights, duties, commitments and other obligations
pursuant to the letter agreement and attached term sheet dated December 14, 2001
between you and GE Capital (the "Letter Agreement and Term Sheet") shall be
terminated and discharged and of no further force and effect. Immediately prior
to the occurrence of the Effective Time, your Change in Control Agreement dated
November 29, 2001 between you and the Company (the "Change in Control
Agreement"), shall be terminated and discharged and of no further force and
effect.
2. Employment and Term. Subject to the terms and conditions set
forth in this agreement (the "Agreement"), the Company agrees to employ you, and
you agree to be employed by the Company, for a period of one year commencing on
the Effective Time (the "Term").
3. Duties. For so long as you remain employed by the Company
during the Term pursuant to this Agreement, you will be responsible for
providing transition services to the Company and GE Capital in connection with
the acquisition by GE Capital of the Company, including assisting in the
integration of the Company and GE Capital and completing ongoing projects
(including the acquisition of Storage USA and the implementation of the business
plan) and performing those duties which are
substantially similar to the duties you performed immediately prior to the
Effective Time, taking into account the Merger and the fact that following the
Effective Time, the Company no longer will be a stand-alone publicly traded
company. You shall perform your duties in a manner that is consistent and in
compliance with GE Capital's integrity policy: Integrity: The Spirit and the
Letter of Our Commitment, a copy of which has been provided to you. During your
employment pursuant to this Agreement, you may engage in business, civic,
charitable, personal and industry obligations and endeavors so long as they do
not, in your good faith judgement, individually or in the aggregate, interfere
with the proper performance of your services hereunder or otherwise violate this
Agreement.
4. Compensation; Expenses; Administrative Support; Benefit
Plans.
(a) Salary. For so long as you are employed by the Company
during the Term, the Company shall pay you, and you shall accept from the
Company for your services, a salary at the rate of one million, two hundred and
ninety-three thousand dollars ($1,293,000) per annum (the "Salary"), payable in
accordance with the Company's policy with respect to the payment of base
salaries of its senior executives but not less frequently than monthly (less any
applicable withholding taxes).
(b) Reimbursement of Expenses. For so long as you are employed
by the Company during the Term, you will be entitled to receive prompt
reimbursement for all expenses incurred by you in performing your services
hereunder in accordance with the policies and procedures of the Company as in
effect for its senior executives from time to time.
(c) Administrative Support. For so long as you are employed by
the Company during the Term, the Company shall provide you with office
accommodations and secretarial, computer and other support no less favorable in
your judgment than that provided to you by the Company prior to the Effective
Time.
(d) Welfare Benefit; Other Fringe Benefits. For so long as you
are employed by the Company during the Term, you shall be entitled to receive
welfare benefits (including, without limitation, medical insurance, disability
income protection, life insurance coverage and death benefits) no less favorable
than the welfare benefits provided to you and your spouse and dependents by the
Company prior to the Effective Time. In addition, for so long as you are
employed by the Company during the Term, the Company shall provide you with such
other benefits and fringes that are no less favorable than those provided to you
by the Company prior to the Effective Time or, if better, than those provided to
peer executives of GE Capital.
(e) Deferred Compensation Plan. The Company shall continue to
maintain in effect the SCGroup Incorporated Nonqualified Savings Plan (the
"NSP") in accordance with Section 6.6(c) of the Merger Agreement. The Company
shall allow you to defer under the NSP all amounts payable under this agreement
or the non-competition letter agreement dated as of the date hereof (the
"Non-Competition Letter Agreement") in accordance with the terms of the NSP.
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(f) Bonus Payment. If the Effective Time occurs on or after
May 1, 2002, upon the Effective Time the Company shall pay you, and you shall
accept from the Company for your services, a cash payment equal to (1) $2,309.59
times (2) the number of days from May 1, 2002 through the date on which the
Effective Time occurs (inclusive of each such date) (less any applicable
withholding taxes).
5. At Will Employment; Termination of Employment Relationship.
You acknowledge that your employment with the Company is "at will." Either you
or the Company may terminate your employment hereunder at any time during the
Term by providing the non-terminating party with 30 days prior notice of such
termination, in a written notice to the other party complying with the
requirements of paragraph 10 below.
(a) Termination. For purposes of this Agreement, the term
"Termination" shall mean termination of your employment during the Term (i) by
the Company (or by a successor to the Company), or by an affiliate of the
Company, which for purposes of this Agreement shall mean any entity controlled
by, or under common control with, the Company), for any reason other than death,
Disability (as defined below), or Cause (as defined below), or (ii) by
resignation by you. For purposes of this Agreement, you shall be considered to
have a "Disability" during the period in which you are unable, by reason of a
medically determinable physical or mental impairment (determined by a physician
selected by you), to engage in the material and substantial duties of your
regular occupation, which condition is expected to be permanent. For purposes of
this Agreement, the term "Cause" means, in the reasonable judgment of the Board
of Directors of the Company, (i) your willful and continued failure to
substantially perform your duties with the Company after written notification by
the Company, (ii) your willfully engaging in conduct which is demonstrably
injurious to the Company, monetarily or otherwise, or (iii) your engaging in
egregious misconduct involving serious moral turpitude. For purposes of this
Agreement, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that such action was in the best interest of the Company.
(b) Death. Your employment shall terminate upon your death.
(c) Date of Termination. "Date of Termination" shall mean (i) if
your employment is terminated by your death, the date of your death and (ii) if
your employment is terminated pursuant to paragraph 5(a), by the Company for
Cause or due to your Disability, or after the expiration of the Term, 30 days
after the date on which a notice of termination is given.
6. Effect of Termination of Employment.
(a) Termination. In the event of a Termination (within the
meaning of paragraph 5(a) hereof) during the Term, then the Company shall (i)
pay you your accrued and unpaid Salary and all other accrued obligations of the
Company (including, without limitation, vacation and expense reimbursements)
(collectively, the "Accrued Obligations") through the Date of Termination as
soon as practicable but in no event
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more than thirty (30) days following your Date of Termination; and (ii) provide
you with continuation of welfare benefits and other fringe benefits required to
be provided under paragraph 4(d) for the period commencing on the Date of
Termination and ending on the date which is three years from the expiration of
the Term, and the Company and you shall share the costs of the continuation of
such insurance coverage in the same proportion as such costs were shared
immediately prior to the Date of Termination; provided, however, if you cannot
continue to participate in the policies of the Company or its affiliates
providing such benefits, the Company shall otherwise provide such benefits
outside of the policies on the same after-tax basis as if participation had
continued. In addition, you shall be entitled to your vested benefits, if any,
under the terms of any employee benefit plans maintained by the other Company or
any of its affiliates in accordance with the terms of such plans, including,
without limitation, under the NSP (collectively, the "Vested Benefits").
(b) Death or Disability. In the event of your termination of
employment due to death or Disability (within the meaning of paragraph 5(a)
hereof) during the Term, then the Company shall (i) pay you or your estate the
Accrued Obligations through the Date of Termination as soon as practicable but
no more than thirty (30) days after the Date of Termination, (ii) pay you or
your estate your Salary through the remainder of the Term in accordance with the
Company's normal payroll practices; and (iii) provide you or your eligible
beneficiaries with continuation of welfare benefits and other fringe benefits
required to be provided under paragraph 4(d) for the period commencing on the
Date of Termination and ending on the date which is three years from the
expiration of the Term, and the Company and you shall share the costs of the
continuation of such insurance coverage in the same proportion as such costs
were shared immediately prior to the Date of Termination; provided, however, if
you or your eligible beneficiaries cannot continue to participate in the
policies of the Company or its affiliates providing such benefits, the Company
shall otherwise provide such benefits outside of the policies on the same
after-tax basis as if participation had continued. In addition, you or your
designated beneficiaries shall be entitled to your Vested Benefits, if any.
(c) Cause. In the event of your termination of employment by
the Company for Cause (within the meaning of paragraph 5(a) hereof) during the
Term, then the Company shall pay you the Accrued Obligations through the Date of
Termination as soon as practicable but in no event more than thirty (30) days
following your Date of Termination. In addition, you shall be entitled to your
Vested Benefits, if any.
(d) Expiration of Agreement. In the event your employment with
the Company is terminated by you or the Company for any reason other than Cause
upon or following the completion of the Term, then the Company shall (i) pay you
the Accrued Obligations through the Date of Termination as soon as practicable
but in no event more than thirty (30) days following your Date of Termination,
(ii) provide you with continuation of welfare benefits and other benefits and
perquisites provided under paragraph 4(d) for the period commencing on the date
your employment with the Company is terminated and ending on the date which is
three years following the expiration of the Term, and the Company and you shall
share the costs of the
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continuation of such insurance coverage in the same proportion as such costs
were shared immediately prior to the Date of Termination; provided, however, if
you cannot continue to participate in the policies of the Company or its
affiliates providing such benefits, the Company shall otherwise provide such
benefits outside of the policies on the same after-tax basis as if participation
had continued. In addition, you shall be entitled to your Vested Benefits, if
any.
(e) Outplacement Services. If your Date of Termination occurs
during the Term, at your election, the Company shall provide you with
outplacement service of an experienced firm selected by the Company and
acceptable you located not more than fifty miles from the location of your
office immediately prior to the Effective Date, provided that the cost of such
services shall not exceed $25,000 and such services shall not extend beyond 36
months from your Date of Termination.
7. Deductions and Withholdings. The Company shall be entitled
to withhold any amounts payable under this Agreement on account of payroll taxes
and similar matters as are required by applicable law, rule or regulation of
appropriate governmental authorities.
8. Make-Whole Payments. If any payment or benefit from the
Company, GE Capital or any of their respective affiliates to which you are
entitled, whether under this Agreement or otherwise, including, without
limitation, under the Non-Competition Letter Agreement, (a "Payment") is subject
to any tax under section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any similar federal or state law (an "Excise Tax"), the Company
shall pay to you an additional amount (the "Make Whole-Amount") which is equal
to (i) the amount of the Excise Tax, plus (ii) the aggregate amount of any
interest, penalties, fines or additions to any tax which are imposed in
connection with the imposition of such Excise Tax, plus (iii) all income, excise
and other applicable taxes imposed on you under the laws of any Federal, state
or local government or taxing authority by reason of the payments required under
clause (i) and clause (ii) and this clause (iii).
(a) For purposes of determining the Make-Whole Amount, you
shall be deemed to be taxed at the highest marginal rate under all applicable
local, state, federal and foreign income tax laws for the year in which the
Make-Whole Amount is paid. The Make-Whole Amount payable with respect to an
Excise Tax shall be paid by the Company coincident with the Payment with respect
to which such Excise Tax relates.
(b) All calculations under this paragraph shall be made
initially by the Company and the Company shall provide prompt written notice
thereof to you to enable you to timely file all applicable tax returns. Upon
your request, the Company shall provide you with sufficient tax and
compensation data to enable you or your tax advisor to independently make the
calculations described in subparagraph (a) above and the Company shall reimburse
you for reasonable fees and expenses incurred for any such verification.
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(c) If you give written notice to the Company of any objection to
the results of the Company's calculations within 60 days of your receipt of
written notice thereof, the dispute shall be referred for determination to tax
counsel selected by the independent auditors of the Company ("Tax Adviser"). The
Company shall pay all reasonable fees and expenses of such Tax Adviser. Pending
such determination by the Tax Adviser, the Company shall pay you the Make-Whole
Amount as determined by it in good faith. The Company shall pay you any
additional amount determined by the Tax Adviser to be due under this paragraph
(together with interest thereon at a rate equal to l20% of the Federal
short-term rate determined under section 1274(d) of the Code) promptly after
such determination.
(d) The determination by the Tax Adviser shall be conclusive
and binding upon all parties unless the Internal Revenue Service, a court of
competent jurisdiction, or such other duly empowered governmental body or agency
(a "Tax Authority") determines that you owe a greater or lesser amount of Excise
Tax with respect to any Payment than the amount determined by Tax Counsel.
(e) If a Taxing Authority makes a claim against you which, if
successful, would require the Company to make a payment under this paragraph,
you agree to contest the claim, with counsel reasonably satisfactory to the
Company, on request of the Company subject to the following conditions:
(i) You shall notify the Company of any such claim within 10
days of becoming aware thereof. In the event that the Company desires the claim
to be contested, it shall promptly (but in no event more than 30 days after the
notice from you or such shorter time as the Taxing Authority may specify for
responding to such claim) request that you contest the claim. You shall not make
any payment of any tax which is the subject of the claim before you have given
the notice or during the 30-day period thereafter unless you receive written
instructions from the Company to make such payment together with an advance of
funds sufficient to make the requested payment plus any amounts payable under
this paragraph determined as if such advance were an Excise Tax, in which case
you will act promptly in accordance with such instructions.
(ii) If the Company so requests, you will contest the claim by
either paying the tax claimed and suing for a refund in the appropriate court or
contesting the claim in the United States Tax Court or other appropriate court,
as directed by the Company; provided, however, that any request by the Company
for you to pay the tax shall be accompanied by an advance from the Company to
you of funds sufficient to make the requested payment plus any amounts payable
under this paragraph determined as if such advance were subject to an Excise
Tax. If directed by the Company in writing you will take all action necessary to
compromise or settle the claim, but in no event will you compromise or settle
the claim or cease to contest the claim without the written consent of the
Company; provided, however, that you may take any such action if you waive in
writing your right to a payment under this paragraph for any amounts payable in
connection with such claim. You agree to cooperate in good faith with the
Company in contesting the claim and to comply with any reasonable request from
the Company
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concerning the contest of the claim, including the pursuit of administrative
remedies, the appropriate forum for any judicial proceedings, and the legal
basis for contesting the claim. Upon request of the Company, you shall take
appropriate appeals of any judgment or decision that would require the Company
to make a payment under this paragraph. Provided that you are in compliance with
the provisions of this section, the Company shall be liable for and indemnify
you against any loss in connection with, and all costs and expenses, including
attorneys' fees, which may be incurred as a result of, contesting the claim, and
shall provide to you within 30 days after each written request therefor by you
of cash advances or reimbursement for all such costs and expenses actually
incurred or reasonably expected to be incurred by you as a result of contesting
the claim.
(e) Should a Tax Authority finally determine that an additional
Excise Tax is owed, then the Company shall pay an additional Make-Whole Amount
to you in a manner consistent with this paragraph with respect to any additional
Excise Tax and any assessed interest, fines, or penalties. If any Excise Tax as
calculated by the Company or Tax Counsel, as the case may be, is finally
determined by a Tax Authority to exceed the amount required to be paid under
applicable law, then you shall repay such excess to the Company within 30 days
of such determination; provided that such repayment shall be reduced by the
amount of any taxes paid by you on such excess which is not offset by the tax
benefit attributable to the repayment.
9. Successors; Binding Agreement.
(a) Successors to Employee. This Agreement and all your rights
hereunder shall inure to the benefit of and be enforceable by your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any amounts would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee, or other designee or, if there
be no such designee, to your estate. You shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
your death, and may change such election, in either case by giving the Company
written notice thereof. In the event of your death or a judicial determination
of your incompetence, reference in this Agreement to you shall be deemed, where
appropriate, to refer to your beneficiary, estate or other legal representative.
Your obligations hereunder may not be delegated, and except as otherwise
provided herein relating to the designation of a devisee, legatee or other
designee, you may not assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of this Agreement or any of your rights hereunder, and any
such attempted delegation or disposition shall be null and void and without
effect.
(b) Successors to the Company. This Agreement shall be binding
upon the Company, GE Capital and their respective successors. The Company and GE
Capital each shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of its
business and/or assets to expressly assume and agree to perform this Agreement
in the same manner and to the
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same extent that the Company or GE Capital, as applicable, would be required to
perform it if no succession had taken place.
10. Notices. For purposes of this Agreement, notices and all
other communications provided for shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to you:
If to the Company:
Security Capital Group, Inc.
c/o General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel [Security Capital]
Facsimile No.: (000) 000-0000
with a copy to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Manager - Human Resources [Security Capital]
Facsimile No.: (000) 000-0000
or to such other address as any 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 provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by you and the Company. No waiver by either party
hereto at any time of any breach by the other 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. This Agreement constitutes the
complete understanding between the parties with respect to your provision of
services and supersedes any other prior oral or written agreements, arrangements
or understandings between you and the Company, except pursuant to the
Non-Competition Letter Agreement and the Merger Agreement. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter
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hereof have been made by either party which are not set forth expressly in this
Agreement, except as set forth in the Non-Competition Letter Agreement and the
Merger Agreement. This Agreement may not be changed or terminated orally but
only by an agreement in writing signed by the parties hereto. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York.
12. Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in New York, New York, in accordance with the laws of the State of New York, by
three arbitrators appointed by the parties. If the parties cannot agree on the
appointment of the arbitrators, one shall be appointed by the Company and one by
the Executive and the third shall be appointed by the first two arbitrators. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this paragraph 12. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. In the event that it shall be necessary or desirable for you to retain
legal counsel or incur other costs and expenses in connection with enforcement
of your rights under this Agreement, the Company shall pay (or you shall be
entitled to recover from the Company, as the case may be) your reasonable
attorneys' fees and costs and expenses in connection with enforcement of your
rights (including the enforcement of any arbitration award in court). Payments
shall be made to you at the time such fees, costs and expenses are incurred. If,
however, the arbitrators shall determine that, under the circumstances, payment
by the Company of all or a part of any such fees and costs and expenses would be
unjust, you shall repay such amounts to the Company in accordance with the order
of the arbitrators.
13. Validity; Effectiveness. 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.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. Guarantee. GE Capital shall cause the Company to perform all
of its obligations hereunder, including without limitation the payment by the
Company of all amounts that the Company is obligated to pay to you under this
Agreement.
16. Mitigation and Set-Off. You shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise. Neither the Company nor GE Capital shall
be entitled to set off against the amounts or benefits payable to you under this
Agreement any amounts you owe to the Company, GE Capital or any of their
affiliates, any amounts or benefits you earn in other employment after
termination employment with the Company, or any amounts which you might have
been earned in other employment had you sought such other employment.
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If the foregoing is satisfactory, please so indicate by signing
and returning to the Company the enclosed copy of this letter whereupon this
will constitute our agreement on the subject.
SECURITY CAPITAL GROUP, INC.
By:____________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION, for
purposes of Section 15 hereof.
By:____________________________
Name:
Title:
ACCEPTED AND AGREED TO:
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XXXXXX X. XXXXXXX
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