AMENDMENT NO. 1 TO SEVERANCE AND CHANGE IN CONTROL AGREEMENT
AMENDMENT
NO. 1 TO
This
Amendment No. 1 (“Amendment”) to Severance and Change in Control Agreement
(“Agreement”) is entered into by and between Xxxxxxxxxx Realty Investors, a
Texas real estate investment company (the “Company”) and Xxxxxxx Xxxxxxx (“Executive”).
Unless defined in this Amendment, all initial capitalized terms shall have the
meanings set forth in the Agreement.
Whereas, Company and Executive entered
into the Agreement, dated as of December 31, 2008;
and
Whereas, Company and Executive desire
to amend the Agreement, effective as of January 1, 2008, to comply with Section
409A of the Code and to effect certain other changes as set forth
herein:
Now, therefore, Company and Executive
hereby agree as follows, effective January 1, 2008:
1. Section
2 of the Agreement is hereby amended to be and read as follows:
2. Termination
Following a Change in Control. The Company shall pay the
Severance Benefit to Executive if, during the Severance Period, (i) Executive's
employment with the Company is terminated by the Company other than for Cause;
(ii) Executive’s employment is terminated due to permanent disability or death;
(iii) Executive terminates his employment with the Company (which he shall be
entitled to do) due to the:
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(a)
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failure
to elect or reelect or otherwise maintain Executive in the office or the
position, or a substantially equivalent office or position, of or with the
Company which Executive held immediately prior to a Change in Control, or
the removal of Executive as a Trust Manager of the Company (or any
successor thereto) if Executive had been a Trust Manager of the Company
immediately prior to the Change in
Control;
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(b)
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material
diminution in the nature or scope of the authorities, powers, functions,
responsibilities or duties attached to the position with the Company which
Executive held immediately prior to the Change in Control or a material
reduction in the Executive's base
pay;
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(c)
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the
determination by Executive (which determination will be conclusive and
binding upon the parties hereto provided it has been made in good faith
and in all events will be presumed to have been made in good faith unless
otherwise shown by the Company by clear and convincing evidence) that a
material negative change in circumstances has occurred following a Change
in Control, including without limitation, a material negative change in
the scope of the business or other activities for which Executive was
responsible immediately prior to the Change in Control, which has rendered
Executive substantially unable to carry out,
has
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materially
hindered Executive's performance of, or has caused Executive to suffer a
substantial material reduction in, any of the authorities, powers, functions,
responsibilities, or duties attached to the position held by Executive
immediately prior to the Change in Control;
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(d)
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the
liquidation, dissolution, merger, consolidation or reorganization of the
Company or transfer of all or substantially all of its business and/or
assets, unless the successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to which all or
substantially all of the Company's business and/or assets have been
transferred (directly or by operation of law) assumes all duties and
obligations of the Company under this Agreement, so that it is reasonably
likely that there will be no material breach of the Agreement by the
Company or its
successor-in-interest;
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(e)
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the
Company relocates its principal executive offices, or requires Executive
to have Executive's principal location of work changed, to any location
which is in excess of 25 miles from the location thereof immediately prior
to the Change in Control, or requires Executive to travel away from
Executive's office in the course of discharging Executive's
responsibilities or duties hereunder at least 20% more (in terms of
aggregate days in any calendar year or in any calendar quarter when
annualized for purposes of comparison to any prior year) than was required
of Executive in any of the three full years immediately prior to the
Change in Control without, in either case, Executive's prior written
consent; and/or
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(f)
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without
limiting the generality or effect of the foregoing, any material breach of
this Agreement by the Company or any successor
thereto.
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The
Executive must give notice to the Company of the existence of any of the
foregoing conditions within ninety (90) days of the initial existence of the
condition, and the Company shall have a period of not less than thirty (30) days
to remedy the condition.
Any
Severance Benefit due under this Section 2 shall be due and payable within five
business days after the occurrence of the event giving rise to the Company's
obligation to pay the Severance Benefit.
2. Section
3(a) of the Agreement is hereby amended, as underlined, to be and read as
follows:
(a) In
addition to the Severance Benefit, during the Severance Period, the Company will
arrange to provide Executive with Employee Benefits that are welfare benefits
(including, but not limited to, medical/dental program, life insurance,
etc. but not share options, share purchase, share appreciation,
dividend equivalent rights or similar compensatory benefits) substantially
similar to those which Executive was receiving or entitled to receive
immediately prior to the Change in Control. Such one year period will
be considered service with the Company for the purpose of determining service
credits and benefits due and payable to Executive under the Company's retirement
income, supplemental executive retirement, and other
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benefit
plans of the Company applicable to Executive, Executive's dependents, or
Executive's beneficiaries immediately prior to the Change in
Control. If and to the extent that any benefit described in this Section 3(a) is
not or cannot be paid or provided under any policy, plan, program or arrangement
of the Company, then the Company will itself pay or provide for the payment of
such Employee Benefits to Executive, and, if applicable, Executive's dependents
and beneficiaries; to
the extent that such payment is includable in gross income of the Executive, it
shall be made no later than the 15th day of the third month
following the end of the taxable year in which Executive becomes entitled to
such payment. Without otherwise limiting the purposes or
effect of Section 4, Employee Benefits otherwise receivable by Executive
pursuant to this Section 3(a) will be reduced to the extent comparable welfare
benefits are actually received by Executive from another employer during the
Severance Period following Executive's termination date. The
immediately preceding sentence is not intended to modify the provisions of
Paragraph 4 of the Agreement.
3. Section
5(f)(D) of the Agreement is hereby amended, as underlined, to be and read as
follows:
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(D)
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permit
the Company to participate in any proceedings relating to such claims;
provided, however, that the Company will bear and pay directly all costs
and expenses (including interest and penalties) incurred in connection
with such contest and will indemnify and hold harmless Executive, on an
after-tax basis, for and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without
limiting the foregoing provisions of this Section 5(f), the Company will
control all proceedings taken in connection with the contest of any claim
contemplated by this Section 5(f) 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 (provided,
however, that Executive may participate therein at Executive's own cost
and expense) and may, at its option, either direct Executive to pay the
tax claimed and xxx for a refund or contest the claim in any permissible
manner, and Executive will 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 may determine;
provided, however, that if the Company directs Executive to pay the tax
claimed and xxx for a refund, the Company will pay an amount to
Executive equal to the tax claimed and will indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income
or other tax, including interest or penalties with respect thereto,
imposed with respect to such payment; and
provided further, however, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive
with respect to which the contested amount is claimed to be due is limited
solely to such contested amount. The Company's control of any
such contested claim will be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive will be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing
authority.
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4. Section
5(g) of the Agreement is hereby amended, as underlined, to be and read as
follows:
(g) If,
after the receipt by Executive of an amount paid by the Company
pursuant to Section 5(f), Executive receives any refund with respect to such
claim, Executive will (subject to the Company's complying with the requirements
of Section 5(f)) pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto) within 30
calendar days after such receipt and the Company's satisfaction of
all accrued obligations under this Agreement. If, after the receipt
by Executive of any amount paid by the Company
pursuant to Section 5(f), a determination is made that Executive will not be
entitled to any refund with respect to such claim and the Company does not
notify Executive in writing of its intent to contest such determination prior to
the expiration of 30 calendar days after such determination, the amount of any such
payment will offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid by the Company to Executive pursuant to this Section
5.
5. Section
6 of the Agreement is hereby amended, as underlined, to be and read as
follows:
6.
Legal
Fees and Expenses; Security. It is the intent of the Company
that Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
to compensation upon a Change in Control by litigation or otherwise because the
cost and expense thereof would substantially detract from the benefits intended
to be extended to Executive hereunder. Accordingly, if it should
appear to Executive that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or any other
person takes or threatens to take any action to declare the agreement to pay
Executive compensation upon a Change in Control void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, Executive the benefits provided or intended to be provided to
Executive hereunder, the Company irrevocably authorizes Executive from time to
time to retain counsel of Executive's choice, at the expense of the Company as
hereinafter provided, to advise and represent Executive in connection with any
such interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any Company Manager, officer, shareholder, or other
person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Executive's entering into an attorney-client relationship with such
counsel, and in that connection the Company and Executive agree that a
confidential relationship will exist between Executive and such
counsel. Without regard to whether Executive prevails, in whole or in
part, in connection with any of the foregoing, the Company will pay and be
solely financially responsible for any and all attorneys' and related fees and
expenses incurred by Executive in connection with any of the foregoing, provided such fees and
expenses are incurred no later than the last day of Executive’s second taxable
year following the taxable year in which Executive separated from service and
the payment is made to Executive no later than the last day of Executive’s third
taxable year following the taxable year in which Executive separated from
service.
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This
Amendment may be executed in identical counterparts, which when taken together
shall constitute one and the same instrument. A counterpart transmitted by
facsimile or electronic mail shall be deemed an original for all
purposes.
In
Witness Whereof, the parties have executed this Amendment as of the dates
indicated below:
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XXXXXXXXXX
REALTY INVESTORS
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By:
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/s/
Xxxxxx Xxxxxxxxx
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Date:
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December
31, 2008
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EXECUTIVE
/ Xxxxxxx Xxxxxxx
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By:
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/s/
Xxxxxxx Xxxxxxx
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Date:
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December
31, 2008
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