Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of March 1, 2002 (the
"Effective Date") between Developers Diversified Realty Corporation, an Ohio
corporation (the "Company") and Xxxxx X. Xxxxxx ("Xxxxxx" or the "Executive").
WITNESSETH:
WHEREAS, Xxxxxx currently serves as Vice Chairman of the Board and
Chief Investment Officer of the Company, and has served as an executive officer
of the Company since its organization and as an officer and principal of its
predecessor;
WHEREAS, the Executive has advised the Board of his current intention
to gradually reduce his active involvement with the Company; and
WHEREAS, the Company desires to retain the services of the Executive
for a significant period of time both as an executive officer and thereafter.
NOW, THEREFORE, the parties agree as follows:
1. EXECUTIVE TERM. Executive agrees to serve as Senior Investment
Officer with principal responsibility for the Transaction Group and to serve as
an advisor to the Investment Committee (consisting of senior executive officers
of the Company) or any successor thereto, until December 31, 2003. He shall also
continue to source acquisitions and shall act as coordinator for special
projects (i.e., TIF financings and litigation) assigned by the Chairman.
Executive agrees to perform such other duties as may reasonably be requested by
the Chairman. At the end of the two-year period (the "Executive Term"),
Executive's employment as a senior executive officer shall terminate unless
renewed by mutual agreement of the parties.
2. COMPENSATION. During the Executive Term, Executive shall be paid
compensation of Three Hundred Fifty Thousand Dollars ($350,000) per year. The
Company may pay to Executive additional compensation, as determined in the sole
discretion of the Chairman of the Board and/or the Board of Directors. The
parties acknowledge that the foregoing compensation includes salary and bonus
for 2002 and subsequent years and that Executive is entitled to a 2001 bonus
equal to Two Hundred Forty Thousand Dollars ($240,000) for his performance
during such year.
3. EMPLOYMENT AFTER CESSATION AS AN EXECUTIVE OFFICER. Following the
Executive Term, for a period of five (5) years (the "Special Advisor Period"),
Xxxxxx shall serve in the capacity as Special Advisor to the Chairman of the
Board and Chief Executive Officer working on such special projects as may, from
time to time, be determined by the Chairman and/or the Board of Directors of the
Company. Xxxxxx'x
base compensation as a Special Advisor shall be One Hundred Thousand Dollars
($100,000) per annum unless the parties mutually agree to another amount. The
Executive Term and the Special Advisor Period, as either or both may be extended
by mutual written agreement of the parties, are collectively referred to herein
as the "Employment Term."
4. TIME COMMITMENT. Recognizing the transitional intent of this
Agreement, the parties recognize that Xxxxxx will devote between sixty to
sixty-five percent (60-65%) of his business time to the performance of his
duties to the Company during the Executive Term. Unless the parties mutually
agree, in writing, to a revised schedule, Xxxxxx shall not be obligated to work
more than twenty-five (25%) of his business time during the Special Adviser
Period.
5. BENEFITS. During the Employment Term, Xxxxxx shall be provided with
the following benefits:
(a) The Company shall continue to provide the Executive with medical,
disability, hospitalization and dental insurance for he and his family,
consistent with those currently provided, provided that such insurance coverage
may be modified, from time to time, so long as such coverage is consistent with
that provided other senior executive officers of the Company.
(b) The Company shall continue to provide to Executive, on a regular
basis, a new, full-sized automobile, or other automobile of equal or lesser
value of the Executive's choice, for the exclusive use of the Executive,
together with automobile theft, casualty, and liability insurance, and payment
or reimbursement of the Executive for all maintenance, repair or gasoline. In
lieu of the foregoing, the Company may provide the Executive an automobile
allowance, the dollar amount of which shall be substantially commensurate with
the cost for such automobile, together with insurance costs, maintenance,
repairs and gasoline.
(c) Executive shall continue to participate in all retirement and other
benefit plans of the Company generally available from time to time to employees
of the Company and for which the Executive qualifies under the terms thereof
(and nothing in this Agreement shall or shall be deemed to in any way effect the
Executive's right and benefits thereunder except as expressly provided herein).
(d) Executive is entitled to such periods of vacation and sick leave
allowance as shall be consistent with the Company's vacation and leave policy
for executive officers.
(e) During the Executive Term only, Executive shall, at the discretion
of the Compensation Committee of the Board of Directors, continue to be entitled
to participate
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in any equity or other employee benefit plan that is generally available to
senior executive officers, as distinguished from general management of the
Company. The Executive's participation in and benefits under any such plan shall
be on the terms and subject to the conditions specified in the governing
document of the particular plan.
(f) The Company shall continue, on the Executive's behalf, to pay the
regular membership fees, assessments and dues, incurred during the Employment
Term for one (1) golf club and one (1) business club, and shall reimburse the
Executive the amount of any charges actually and reasonably incurred at such
clubs in the conduct of the Company's business.
(g) The Company shall reimburse Executive or provide him with an
expense allowance during the Employment Term for travel, entertainment and other
expenses reasonably and necessarily incurred by Executive in connection with the
Company's business. Executive shall furnish such documentation with respect to
reimbursement to be paid hereunder as the Company shall reasonably request.
(h) The Company shall continue to reimburse Executive or provide him
with an expense allowance of up to Ten Thousand Dollars ($10,000) per annum
during the Employment Term for financial planning, tax return and financial
statement preparation services.
(i) Executive's current and any future granted stock options will
continue to vest during the Employment Term and may be exercised until the
expiration date of such stock options.
(j) The Company shall provide the Executive with life insurance
coverage consistent with that currently provided other senior executive officers
of the Company, and the Company agrees to continue the Company's premium payment
under the 1993 split-dollar life insurance agreement between the Company and the
Executive (the "1993 Agreement"). Premiums on the Pacific Life insurance policy
under the 1993 Agreement will be in amounts sufficient to have the policy be
"paid up" and requiring no additional payments for the policy to maintain the
death benefits through the Executive's lifetime prior to the end of the
Executive Term. Premiums on the Metropolitan Life policy shall continue to be
paid by the Company during the Employment Term and, if the policy has not become
a fully-paid policy by the end of such term, any premiums required to have such
policy become fully paid shall be placed in an escrow account with an
independent escrow agent directed to continue premium payments on the policy
until such time as the policy becomes fully paid. All other terms of the
policies shall remain unchanged. The Company shall be entitled to receive from
the death proceeds of each policy an amount equal to its cumulative premiums
paid on such policy. Such payments to the Company shall be payable (i) upon the
death of the Executive, in the case of the Pacific Life insurance policy, and
(ii) upon the death of the latter of the Executive and his spouse, in
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the case of the Metropolitan Life insurance policy. The payment of premiums
shall be treated as additional compensation in accordance with the past
practices of the Company.
6. POST-RETIREMENT BENEFITS. Following the Employment Term, Xxxxxx will
be provided with the following benefits:
(a) All stock options held by Xxxxxx under the Company's stock option
plans or other arrangements that are not vested will become immediately vested
and Xxxxxx may exercise any of his outstanding options at any time prior to the
expiration date of such options.
(b) For a five (5) year period following the expiration of the
Employment Term (unless employment is terminated for "cause" as defined herein),
the Company shall provide Xxxxxx, at no cost to him, suitable office space
(which facilities may or may not be contiguous to the Company's executive
offices) and a full time secretary and other customary office support functions.
(c) Upon the expiration of the Employment Term, medical and dental
group coverage will be continued for Xxxxxx and his dependents until such date
as he and his spouse (coverage for his spouse shall, to the extent necessary
continue following his death) are eligible for coverage under the federal
Medicare program. Xxxxxx shall be responsible for the payment of all premiums
for such coverage following expiration of the Employment Term. The foregoing
benefit shall be, in addition to, and not in lieu of, coverage required under
the Consolidated Omnibus Budget Reconciliation Act (COBRA).
(d) The Company shall continue to maintain the life insurance policies
on Xxxxxx referenced in Section 5(j) above and the Company shall be entitled to
receive from the proceeds of the policies or other assets of the policy owner,
the amounts specified at the times specified in Section 5(j).
(e) The Company, at the request of Xxxxxx, shall transfer its ownership
or lease interest in the vehicle used by Xxxxxx under Section 5(b) hereof to
Xxxxxx. Xxxxxx shall be responsible for all mortgage or lease payments of such
vehicle, if any, due on or after the date of his termination of employment.
7. PAYMENT IN THE EVENT OF DEATH OR PERMANENT DISABILITY.
(a) In the event of the Executive's death or "permanent disability" (as
hereinafter defined) during the Employment Term, the Company shall pay to
Executive (or his successors and assigns in the event of his death) an amount
equal to two (2) times his then effective compensation per annum as determined
under Section 2 or 3 hereof.
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The benefit to be paid pursuant to this Section 7 shall be paid within ninety
(90) days after the date of death or permanent disability, as the case may be.
(b) In the event of the Executive's death or permanent disability, all
unvested stock options shall immediately vest and be exercisable until the
expiration date thereof.
(c) Upon such death or disability, Executive's employment shall
terminate and, he shall be entitled to no further compensation or other benefits
under this Employment Agreement, except as otherwise provided herein and as to
that portion of any unpaid salary and other benefits accrued and earned by him
hereunder up to and including the date of such death or permanent disability, as
the case may be.
(d) For purposes of this Employment Agreement, Executive's "permanent
disability" shall be deemed to have occurred after one hundred twenty (120) days
in the aggregate during any consecutive twelve (12) month period, or after
ninety (90) consecutive days, during which period, in either case, the
Executive, by reason of his physical or mental disability or illness, shall have
been unable to discharge his duties under this Employment Agreement. The date of
permanent disability shall be such one hundred twentieth (120th) or ninetieth
(90th) day, as the case may be. In the event either the Company or the
Executive, after receipt of notice of the Executive's permanent disability from
the other, dispute that the Executive's permanent disability shall have
occurred, the Executive shall promptly submit to a physical examination by the
chief of medicine of any major accredited hospital in the Cleveland, Ohio area
and, unless such physician shall issue his written statement to the effect that
in his opinion, based on his diagnosis, the Executive is capable of resuming his
employment and devoting his full time and energy to discharging his duties
within thirty (30) days after the date of such statement, permanent disability
shall be deemed to have occurred.
8. TERMINATION.
(a) The employment of Xxxxxx under this Employment Agreement and the
term hereof, may be terminated by the Company:
(i) on the death or permanent disability (as previously
defined) of the Executive; or
(ii) for cause at any time by action of the Board. For
purposes hereof, the term "cause" shall mean the Executive's fraud,
conviction of a felony or other offense that results in material injury
to the business reputation of the Company, commission of an act or
series of repeated acts of dishonesty which are materially inimical to
the best interests of the Company, or the Executive's willful and
repeated failure to perform his duties under this Employment Agreement,
which
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failure has not been cured within fifteen (15) days after the Company
gives written notice thereof to the Executive.
The exercise by the Company of its rights of termination under this Section 8
shall be the Company's sole remedy in the event of the occurrence of the event
as a result of which such right to terminate arises. Upon any termination of
this Employment Agreement, Executive shall be deemed to have resigned from all
offices and directorships held by the Executive in the Company.
(b) In the event of a termination claimed by the Company to be for
"cause" pursuant to Section 8(a), the Executive shall have the right to have the
justification for said termination determined by arbitration in Cleveland, Ohio.
In order to exercise such right, the Executive shall serve on the Company within
thirty (30) days after termination, a written request for arbitration. The
Company immediately shall request the appointment of an arbitrator by the
American Arbitration Association and thereafter the question of "cause" shall be
determined under the rules of the American Arbitration Association, and the
decision of the arbitrator shall be final and binding on both parties. The
parties shall use all reasonable efforts to facilitate and expedite the
arbitration and shall act to cause the arbitration to be completed as promptly
as possible. During the pendency of the arbitration, the Executive shall
continue to receive all compensation and benefits to which he is entitled
hereunder, and if at any time during the pendency of such arbitration the
Company fails to pay and provide all compensation and benefits to the Executive
in a timely manner, the Company shall be deemed to have automatically waived
whatever rights it then may have had to terminate the Executive's employment for
cause. Expenses of the arbitration shall be borne equally by the parties.
(c) Except as otherwise provided in this Agreement, upon termination,
the Executive shall be entitled to no further compensation or other benefits
under this Employment Agreement, except as to that portion of any unpaid salary
and other benefits accrued and earned by him hereunder up to and including the
effective date of such termination.
(d) If, during the Executive Term or any extension thereof, there shall
occur a "Change in Control" and a "Triggering Event" (as those terms are defined
in the Change in Control Agreement, dated March 24, 1999, between the Company
and the Executive (the "Change in Control Agreement")), then the Company or the
Executive shall have the right to terminate the employment of the Executive with
the Company and, in the event of such termination, the payments to be made to
the Executive in connection therewith shall be governed by the Change of Control
Agreement and the Executive shall be entitled to no further compensation or
other benefits under this Employment Agreement, except as to that portion of any
unpaid salary and other benefits accrued and earned by him hereunder up to and
including the effective date of such termination. If, during the Special Advisor
Period or any extension thereof, there shall occur a "Change in Control"
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and a "Triggering Event" (as those terms are defined in the Change in Control
Agreement), then the Executive shall be entitled to the lump-sum severance
payment specified in Article II of the Change in Control Agreement, but shall be
entitled to receive the post-employment benefits specified in Section 6 of this
Agreement.
(e) In addition to the termination provisions set forth earlier in this
Section 8, the Company may terminate this Agreement at any time without "cause."
If the Company terminates Employee's employment for reasons other than "cause,"
Employee shall be entitled to a lump-sum severance payment equal to the payments
under this contract on the remaining Employment Term, a continuation of the
benefits provided in Section 5 through the remaining Employment Term, and the
post-employment benefits specified in Section 6. Any termination of the Employee
for "Good Reason" shall be deemed to be a termination by the Company without
"cause." Employee acknowledges that the potential severance payment hereunder is
attributable, in part, to his agreement to the covenants set forth in Sections 9
and 11, which is applicable regardless of the reason for his termination of
employment. "Good Reason" means (i) a material and continuing failure to pay to
Employee compensation and benefits that have been earned, if any, by Employee,
(ii) any downward adjustment by the Board of Directors in Employee's
compensation or benefits, (iii) a material reduction in Employee's title,
position or responsibilities, or (iv) any breach by the Company of this
Employment Agreement which is material and which is not cured within thirty (30)
days after written notice thereof to the Company from Employee.
9. COVENANTS AND CONFIDENTIAL INFORMATION.
(a) The Executive acknowledges the Company's reliance and expectation
of the Executive's continued commitment to performance of his duties and
responsibilities during the term of this Employment Agreement. In light of such
reliance and expectation on the part of the Company, during the Employment Term,
the Executive shall not, directly or indirectly, own, manage, control or
participate in the ownership, management, or control of, or be employed or
engaged by or otherwise affiliated or associated as a consultant, independent
contractor or otherwise with any other corporation, partnership, proprietorship,
firm, association or other business entity engaged in the business of, or
otherwise engage in the business of, acquiring, owning, developing or managing
commercial shopping centers; provided, however, that the ownership of not more
than two percent (2%) of any class of publicly traded securities of any entity
shall not be deemed a violation of this covenant. Notwithstanding the foregoing,
in the event Executive desires during the Special Advisor Term to develop any
shopping center real estate project that the Company has elected not to
participate in developing, such involvement by Executive shall not be deemed a
violation of this Employment Agreement. Executive shall provide to the Chairman
of the Company a description of any proposed project and the Company shall have
thirty (30) days from receipt of such notice to determine whether or not it
wishes to participate. If the Company desires to
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participate in the development, but is unable to reach an agreement with the
joint development partner, Executive may engage in the development provided the
terms of such involvement are not more favorable to him than the last proposal
submitted to the Company for its involvement.
(b) During the Employment Term and at all times thereafter, Executive
shall not disclose, divulge, discuss, copy or otherwise use or suffer to be used
in any manner, in competition with, or contrary to the interests of, the
Company, any confidential information relating to the Company's operations,
properties or otherwise to its particular business or other trade secrets of the
Company, it being acknowledged by the Executive that all such information
regarding the business of the Company compiled or obtained by, or furnished to,
the Executive while the Executive shall have been employed by or associated with
the Company is confidential information and the Company's exclusive property;
provided, however, that the foregoing restrictions shall not apply to the extent
that such information (A) is clearly obtainable in the public domain, (B)
becomes obtainable in the public domain, except by reason of the breach by the
Executive of the terms hereof, (C) was not acquired by the Executive in
connection with his employment or affiliation with the Company, (D) was not
acquired by the Executive from the Company or its representatives, or (E) is
required to be disclosed by rule of law or by order of a court or governmental
body or agency.
(c) The Executive agrees and understands that the remedy at law for any
breach by him of this Section 9 will be inadequate and that the damages flowing
from such breach are not readily susceptible to being measured in monetary
terms. Accordingly, it is acknowledged that, upon adequate proof of the
Executive's violation of any legally enforceable provision of this Section 9,
the Company shall be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach. Nothing in this
Section 9 shall be deemed to limit the Company's remedies at law or in equity
for any breach by the Executive of any of the provisions of this Section 9 which
may be pursued or availed of by the Company.
(d) The Executive has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon the Company
under this Section 9, and hereby acknowledges and agrees that the same are
reasonable in time and territory, are designed to eliminate competition which
otherwise would be unfair to the Company, do not stifle the inherent skill and
experience of the Executive, would not operate as a bar to the Executive's sole
means of support, are fully required to protect the legitimate interests of the
Company and do not confer a benefit upon the Company disproportionate to the
detriment to the Executive.
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10. INDEMNIFICATION.
(a) The Company agrees that the limitation of liability and all rights
to indemnification now existing in favor of Executive contained in the Company's
Articles of Incorporation and Code of Regulations, in each case as in effect on
the date hereof, shall not be amended in any manner that would adversely affect
the rights of Executive, unless such amendment is required by law. To the extent
permitted by the laws of the State of Ohio, such indemnification shall be
mandatory and not permissive and the Company shall advance all fees, costs and
expenses in connection with such indemnification.
(b) Pursuant to the rights to indemnification referred to in Section
10(a) hereof, the Company agrees to indemnify and hold harmless Executive and
his legal representatives and successors to the fullest extent permitted by the
laws of the State of Ohio with respect to any claim arising at any time out of
any event, action or omission related to or in connection with Executive having
been a director, officer or employee of, or consultant to, the Company or having
served as a director or officer of another corporation or other organization at
the request of the Company. This indemnification shall continue in full force
and effect for a period of not less than the duration of all statutes of
limitations applicable to such matters (or in the case of events, actions or
commissions giving rise to matters of which Executive has promptly notified the
Company of a claim hereunder and which have not been resolved prior to the
expiration of such period, until such matters are finally resolved). Without
limiting the foregoing, the Company shall periodically advance all expenses
(including reasonable attorneys' and paralegals' fees and other costs and
expenses) as incurred with respect to the foregoing to the fullest extent
permitted by the laws of the State of Ohio, and Executive shall be defended by
the counsel of his choice. Executive shall not unreasonably withhold his consent
to the settlement of any claim for monetary damages for which he is entitled to
be fully indemnified hereunder. From and after the Effective Date of this
Agreement, and so long as the Executive is a director and/or officer of the
Company, the Company shall maintain in effect the policies of directors' and
officers' liability insurance to the extent currently maintained by the Company,
together with errors omissions coverage or other equivalent or more
comprehensive liability coverage, all to the extent that such coverage is
available at reasonable commercial rates, and Executive shall be covered by such
policies for acts and omissions as a director or officer of the Company in
accordance with their respective terms to the maximum extent of coverage
available for any director or officer of the Company. The Company shall pay any
deductible amount under such policies of insurance to the extent that the
Company may legally do so.
11. COOPERATION WITH REGARD TO LITIGATION. Executive agrees to
cooperate with the Company during the Employment Term and thereafter by making
himself reasonably available to testify on behalf of the Company or its
affiliates, in any action, suit or proceeding, whether civil, criminal,
administrative, or investigative and to assist the
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Company or any of its affiliates in any such action, suit, or proceeding by
providing information and meeting and consulting with its counsel and
representatives. The Company shall reimburse Executive for all out-of-pocket
expenses, including travel expenses and reasonable counsel fees, if any,
incurred in connection with his compliance with this covenant.
12. MISCELLANEOUS.
(a) The provisions of this Employment Agreement are severable and, if
any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provision to the extent enforceable in any jurisdiction
nevertheless shall be binding and enforceable.
(b) The rights and obligations of the Company under this Employment
Agreement shall inure to the benefit of, and shall be binding on, the Company
and its successors and assigns, and the rights and obligations (other than
obligations to perform services) of the Executive under this Employment
Agreement shall inure to the benefit of, and shall be binding upon, the
Executive and his heirs, personal representatives and assigns.
(c) Any controversy or claim arising out of or relating to this
Employment Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association then
pertaining in the City of Cleveland, Ohio and judgment upon the award rendered
by the arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. The arbitrator or arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration; provided, however, that nothing in this Section 12 shall be
construed so as to deny the Company the right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach by
the Executive of any of his covenants contained in Section 9 hereof. 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 the Company.
(d) Any notice to be given under this Employment Agreement shall be
personally delivered in writing, sent by overnight courier, or shall have been
deemed duly given when received after it is posted in the United State mail,
postage prepaid, certified, return receipt requested, and if mailed to the
Company, shall be addressed to its principal place of business, attention:
General Counsel, and if mailed to the Executive, shall be addressed to him at
his home address last known on the records of the Company, or at such other
address or addresses as either the Company or the Executive may hereafter
designate in writing to the other.
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(e) The failure of either party to enforce any provision or provisions
of this Employment agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Employment Agreement. The rights granted the parties herein are cumulative
and the waiver of any single remedy shall not constitute a waiver of such
party's right to assert all other legal remedies available to it under the
circumstances.
(f) Except as noted herein with respect to the Change in Control
Agreement, this Employment Agreement supersedes all prior agreements and
understandings between the parties and may not be modified or terminated orally.
No modification, termination or attempted waiver shall be valid unless in
writing and signed by the party against whom the same is sought to be enforced.
In the event of any conflict between the terms of this Agreement and the Change
in Control Agreement, the terms of this Agreement shall control.
(g) This Employment Agreement shall be governed by and construed
according to the laws of the State of Ohio.
(h) Captions and paragraph headings used herein are for convenience and
are not a part of this Employment Agreement and shall not be used in construing
it.
(i) Where necessary or appropriate to the meaning hereof, the singular
and plural shall be deemed to include each other, and the masculine, feminine
and neuter shall be deemed to include each other.
(j) This Agreement may be signed in counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.
(k) This Agreement shall inure to the benefit of, and be binding upon,
the Company, its successors and permitted assigns. This Agreement shall also
inure to the benefit of and be binding upon Executive, his executors,
administrators and heirs.
[THIS SPACE LEFT BLANK INTENTIONALLY.]
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the day and year first set forth above.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxxx, Chief Executive Officer
/s/ Xxxxx X. Xxxxxx
-----------------------------------------------
XXXXX X. XXXXXX
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