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EXHIBIT 10.4
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, is between Developers Diversified Realty Corporation,
an Ohio corporation (the "Employer"), and Xxxx X. Xxxxxxx (the "Executive") made
this 12th day of April 1999.
RECITALS
A. Executive is presently employed by Employer as its Vice President
and Director of Development
B. Employer wishes to induce Executive to continue as its Vice
President and Director of Development and, accordingly, to provide certain
employment security to Executive in the event of a "Change in Control" (as
hereinafter defined);
C. Employer believes that it is in the best interest of its
shareholders for Executive to continue in his position on an objective and
impartial basis and without distraction or conflict of interest as a result of a
possible or actual Change in Control; and
D. In consideration of this Agreement Executive is willing to continue
as Employer's Vice President and Director of Development
NOW THEREFORE, IN CONSIDERATION OF EXECUTIVE CONTINUING AS THE VICE
PRESIDENT AND DIRECTOR OF DEVELOPMENT OF EMPLOYER AND OF THE MUTUAL PROMISES
HEREIN CONTAINED, EXECUTIVE AND EMPLOYER, INTENDING TO BE LEGALLY BOUND, HEREBY
AGREE AS FOLLOWS;
ARTICLE I
DEFINITIONS
1. Subject to the provisions of Article III, a "Change in Control" for
the purpose of this Agreement will be deemed to have occurred if, at any time:
(a) Any person or group of persons acting alone or together
with any of its affiliates or associates, acquires legal or beneficial ownership
interest, or voting rights, in twenty percent (20%) or more of the common voting
stock of Employer;
(b) At any time during a period of 24 consecutive months,
individuals who were directors at the beginning of the period no longer
constitute a majority of the members of the Board of Directors unless the
election, or the nomination for election by Employer's shareholders, of each
director who was not a director at the beginning of the period is approved by at
least a majority of the directors who are in office at the time of the election
or nomination and were directors at the beginning of the period; or
(c) A record date is established for determining shareholders
of Employer entitled to vote upon (i) a merger or consolidation of Employer with
another real estate investment trust, partnership, corporation or other entity
in which Employer is not the surviving or continuing entity or in which all or a
substantial part of the outstanding shares are to be converted into or exchanged
for cash, securities, or other property, (ii) a sale or other disposition of all
or substantially all of the assets of Employer or (iii) the dissolution of
Employer.
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2. Subject to the provisions of Article III, a "Triggering Event" for
the purpose of this Agreement will be deemed to have occurred if:
(a) Within two years from the date on which the Change in
Control occurred, Employer terminates the employment of Executive, other than in
the case of a Termination For Cause, as herein defined;
(b) Within two years from the date on which the Change in
Control occurred, Employer reduces Executive's title, responsibilities, power or
authority in comparison with his title, responsibilities, power or authority at
the time of the Change in Control;
(c) Within two years from the date on which the Change in
Control occurred, Employer assigns Executive duties which are inconsistent with
the duties assigned to Executive on the date on which the Change in Control
occurred and which duties Employer persists in assigning to Executive despite
the prior written objection of Executive;
(d) Within two years from the date on which the Change in
Control occurred, Employer reduces Executive's base compensation, his group
health, life, disability or other insurance programs (including any such
benefits provided to Executive's family), his pension, retirement or
profit-sharing benefits or any benefits provided by Employer's Equity-Based
Award Plan, or any substitute therefor, or excludes him from any plan, program
or arrangement in which the other executive officers of Employer are included;
or
(e) Within two years from the date on which the Change in
Control occurred, Employer requires Executive to be based at or generally work
from any location more than fifty miles from the geographical center of
Cleveland, Ohio.
3. A "Termination For Cause" for the purposes of this Agreement will be
deemed to have occurred if, and only if, Executive has committed a felony under
the laws of the United States of America, or of any state or territory thereof,
and has been convicted of that felony, or has pled guilty or nolo contendere
with respect to that felony, and the commission of that felony resulted in, or
was intended to result in, a loss (monetary or otherwise) to Employer or its
clients, customers, directors, officers or employees.
4. "Executive's Annual Bonus" means Executive's annual bonus at the
time of a Triggering Event calculated on the basis of the maximum bonus
available to Executive and the assumption that all performance goals have been
or will be achieved by Employer in the year in which the Triggering Event
occurred.
5. "Executive's Annual Salary" means Executive's annual base salary at
the time of a Triggering Event.
ARTICLE II
SEVERANCE PAYMENT
1. Subject to the provisions of Article III, upon the occurrence of a
Triggering Event, Employer shall pay to Executive a lump sum severance benefit
which will be in addition to any other compensation or remuneration to which
Executive is, or becomes, entitled to receive from Employer. This lump sum
severance payment will be paid by Employer to Executive within 30 days after the
occurrence of a Triggering Event in immediately available funds in an amount
equal to the sum of (i) two
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times Executive's Annual Bonus plus (ii) two times Executive's Annual
Compensation. In addition, Employer shall, at its expense, provide Executive,
and his family, with life, health, disability and accidental death and
dismemberment insurance in an amount not less than that provided on the date on
which the Change in Control occurred, until the earlier of (i) in the event that
Executive shall become employed by another employer after a Triggering Event,
the date on which Executive shall be eligible to receive benefits from such
employer which are substantially equivalent to or greater than the benefits
Executive and his family received from Employer or (ii) the second anniversary
of the date of the Triggering Event.
2. Employer shall provide Executive, at Employer's expense, with
outplacement services and support, the scope and provider of which will be
selected by Executive, for a period of one year following the date of the
Triggering Event.
ARTICLE III
SUBSTITUTION OF EMPLOYMENT
Notwithstanding any other provision of this Agreement to the contrary,
if Employer decides to divide, separate, sell or dispose (collectively,
"Spin-off") all or a significant part of its assets or business relating to real
estate development and, in connection with such Spin-off, Executive's employment
with Employer is terminated but Executive is offered, by the company that
becomes the owner of such assets or business, terms of employment comparable to
those contained in Executive's (i) Employment Agreement dated as of April 5,
1999 (the "Employment Agreement"), and (ii) this Agreement, then the Executive
shall be entitled to no further compensation under the Employment Agreement or
this Agreement, except as to that portion of any unpaid salary and benefits
accrued by him up to and including the effective date of such termination.
ARTICLE IV
SETOFF
No amounts otherwise due or payable under this Agreement will be
subject to setoff or counterclaim by either party hereto.
ARTICLE V
ATTORNEY'S FEES
All attorney's fees and related expenses incurred by Executive in
connection with or relating to the enforcement by him of his rights under this
Agreement will be paid for by Employer.
ARTICLE VI
SUCCESSORS AND PARTIES IN INTEREST
This Agreement will be binding upon and will inure to the benefit of
Employer and its successors and assigns, including, without limitation, any
corporation which acquires, directly or indirectly, by purchase, merger,
consolidation or otherwise, all or substantially all of the business or assets
of Employer. Without limitation of the foregoing, Employer will require any such
successor, by agreement in form and substance satisfactory to Executive,
expressly to assume and agree to perform this Agreement in the same
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manner and to the same extent that it is required to be performed by Employer.
This Agreement will be binding upon and will inure to the benefit of Executive,
his heirs at law and his personal representatives.
ARTICLE VII
ATTACHMENT
Neither this Agreement nor any benefits payable hereunder will be
subject to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge or to execution, attachment, levy or similar process at
law, whether voluntary or involuntary.
ARTICLE VIII
EMPLOYMENT CONTRACT
This Agreement will not in any way constitute an employment agreement
between Employer and Executive and it will not oblige Executive to continue in
the employ of Employer, nor will it oblige Employer to continue to employ
Executive, but it will merely require Employer to pay severance benefits to
Executive under certain circumstances, as aforesaid. In addition, this Agreement
will be considered terminated, and of no further force and effect, if Executive
ceases to be a Board-elected officer or an appointed officer or a key employee
(as determined by the Board of Directors of Employer in its sole discretion and
reflected in the minutes of Board of Directors after notice to such Employee) of
Employer prior to a Change in Control of Employer.
ARTICLE IX
RIGHTS UNDER OTHER PLANS AND AGREEMENTS
1. The severance benefits herein provided will be in addition to, and
are not intended to reduce, restrict or eliminate any benefit to which Executive
may otherwise be entitled by virtue of his termination of employment or
otherwise.
2. Notwithstanding the foregoing, Employer agrees that until such time
as all of the executive loans are paid in full pursuant to the personal loan
program, dated November 16, 1998, provided by The First National Bank of
Chicago, as agent, and certain other lenders to executive officers of Employer,
Employer will (i) continue all guarantees made by Employer and its subsidiaries
under that loan program and (ii) not direct or take any action to cause
Executive's loan under that program to be accelerated or called prior to its
scheduled maturity date.
ARTICLE X
NOTICES
All notices and other communications required to be given hereunder
shall be in writing and will be deemed to have been delivered or made when
mailed, by certified mail, return receipt requested, if to Executive, to the
last address which Executive shall provide to Employer, in writing, for this
purpose, but if Executive has not then provided such an address, then to the
last address of Executive then on file with Employer; and if to Employer, then
to the last address which Employer shall provide to Executive, in writing, for
this purpose, but if Employer has not then provided Executive with such an
address, then to:
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Corporate Secretary
Developers Diversified Realty Corporation
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxx 00000
ARTICLE XI
GOVERNING LAW AND JURISDICTION
This Agreement will be governed by, and construed in accordance with,
the laws of the State of Ohio, except for the laws governing conflict of laws.
If either party institutes a suit or other legal proceedings, whether in law or
equity, Executive and Employer hereby irrevocably consent to the jurisdiction of
the Common Pleas Court of the State of Ohio (Cuyahoga County) or the United
States District Court for the Northern District of Ohio.
ARTICLE XII
ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between Employer
and Executive concerning the subject matter hereof and supersedes all prior
written or oral agreements or understandings between the parties hereto. No term
or provision of this Agreement may be changed, waived, amended or terminated
except by a written instrument.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of this
Agreement, the parties have hereunto set their hands as of the date and year
first above written.
DEVELOPERS DIVERSIFIED
REALTY CORPORATION
/s/ Xxxxx X. Xxxxxx
By_____________________________
/s/ Xxxx X. Xxxxxxx
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EXECUTIVE
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