EMPLOYMENT AGREEMENT
Exhibit 2.4
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made at Cleveland, Ohio, this day of , 2003, between STONEHAVEN REALTY TRUST, a Maryland business trust (the “Trust”), and XXXX X. XXX, 00000 Xxxxxxxxxxx Xxxx, Xxxxx Xxxxxxx, Xxxx 00000 (“Dee”).
WHEREAS, Dee is expected to make major contributions toward the business of the Trust; and
2. POSITION, DUTIES, RESPONSIBILITIES.
(a) Except as set forth in Section 2(b), at all times during the Contract Period, Dee shall have the titles of Trustee, Senior Vice President and Chief Financial Officer of the Trust and shall have and perform the duties and responsibilities of those offices (the “Offices”), subject to the authority of the Board of Trustees of the Trust (the “Board of Trustees”). In addition, Dee may hold such other offices as may be designated from time to time by the Board of Trustees.
(b) Dee will not be appointed to Chief Financial Officer (“CFO”) until five (5) days after the filing of the December 31, 2002 Form 10-KSB with the Securities and Exchange
Commission (the “SEC”). Other than the occurrence of the foregoing event, no further action by the Trust is required for Dee to be appointed CFO. Until Dee becomes CFO hereunder, it is intended that he shall under no circumstances be considered an executive officer of the Trust or be considered to be performing similar functions as such terms are used in Form 10-KSB or Item 307 of Regulation S-B as promulgated by the SEC.
(c) At all times during the Contract Period, Dee shall devote substantially all of his business time, energy, and talent to the business of and to the furtherance of the purposes and objectives of the Trust, and neither directly nor indirectly render any business, commercial, or professional services to any other person, firm, or organization for compensation without the prior approval of the Board of Trustees. Nothing in this Agreement shall preclude Dee from devoting reasonable periods of time to charitable and community activities, service on boards of other companies (public or private) not in competition with the Trust, undertaken after consultation with the Board of Trustees; or the management of his personal investment assets provided:
(i) such activities do not interfere with the performance by Dee of his duties hereunder;
(ii) Dee does not make any single investment in excess of $500,000 in the outstanding securities of a publicly owned equity real estate investment trust or of any other entity engaged primarily in the ownership and/or management of real estate, other than the Trust. This limitation shall not apply to the continued holding by Dee of any investments that were held by him on January 1, 2003 and have been held by him continuously thereafter and any holding by Dee that is approved by the independent Trustees of the Board of Trustees; and
(iii) Dee does not advise, assist, or render any services, either directly or indirectly, to a publicly-owned equity real estate investment trust or in any other entity engaged primarily in the ownership and/or management of real estate that competes with the Trust (except that this limitation shall not apply to the continued holding by Dee of any investments that were held by him on January 1, 2003 and have been held by him continuously thereafter), other than the Trust.
(d) The duties to be performed by Dee under this Agreement shall be performed primarily in Cuyahoga County at the offices of the Trust, and he shall not be required to perform services elsewhere except for travel incident to his performance of services hereunder.
3. BASE SALARY AND PLAN COMPENSATION.
(a) The rate of Dee’s base salary hereunder as of the Effective Date shall be $60,000 per year. The rate of Dee’s base salary is considered to be below the market rate for executives with similar experience and shall be reviewed at least annually during the Contract Period and may be adjusted from time to time, based upon such standards as the Board of
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Trustees may determine to be appropriate, except that no such adjustment shall result in a reduction of Dee’s base salary below the level for the preceding year during the Contract Period.
(b) Dee shall receive the awards and any other compensation that have been earned during the Contract Period and that he is entitled to receive under any of the Trust’s present or future share option, incentive compensation, or executive bonus plan in which he is entitled to participate (such awards and other compensation are hereinafter referred to as “Plan Compensation”).
(a) The Trust may relieve Dee of his duties under this Agreement for as long as Dee is Disabled.
(b) So long as Dee remains Disabled, the Trust shall continue to pay Dee the base salary and bonus (cash and stock) at the rate in effect immediately before he became Disabled, net of any other disability benefits paid to him by the Trust or any insurance funded by the Trust, the Trust shall continue to provide those health and welfare benefits, including contribution to any pension plan, that were being provided to Dee immediately before he became Disabled, and Dee shall continue to earn the Plan Compensation (other than bonus) to which he would have been entitled under Section 3(b) had he continued to be actively employed, until the
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earliest of (i) the first date on which he is no longer Disabled, (ii) the date of his death, (iii) the date on which Dee attains age 70, or (iv) the third anniversary of the date on which he became Disabled. If Dee becomes Disabled, thereafter recovers sufficiently to be able to substantially perform his duties, and later becomes Disabled again, the combined period in which Dee is entitled to receive disability benefits under this Section 7(b) shall not exceed three years.
(b) FOR CAUSE. The Trust may terminate Dee’s employment under this Agreement for “Cause” if:
(i) Except by reason of being Disabled, Dee fails substantially to devote the time and effort required for him to perform his duties hereunder;
(ii) Except by reason of being Disabled, Dee fails to follow directions from the Board of Trustees that are appropriate in the context of his status as an executive officer of the Trust;
(iii) Dee is convicted of a felony involving moral turpitude;
(iv) Dee engages in acts in violation of the provisions of Section 2(c), the confidentiality provisions of Section 13 or otherwise breaches the terms of this Agreement in any material respect; or
(v) Dee willfully, wantonly, voluntarily, and without approval of the Board of Trustees takes any action that he knows to be materially adverse to the interest of the Trust and its shareholders, collectively.
Any termination of Dee’s employment for Cause shall be effective immediately upon the Trust giving Dee 30 days’ notice of termination of employment and the grounds therefore. However, if any failure on Dee’s part referred to in clause (i), (ii) or (iv) of this Section 8(b) is curable, the Trust may not terminate Dee’s employment unless the Board of Trustees first gives him written notice specifying the nature of the failure and the steps that he must take to cure the failure, and Dee fails to take those steps within 30 days after the notice is given.
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(d) BY DEE FOR GOOD REASON. Dee may terminate his employment hereunder for “Good Reason” if one or more of the events listed in clauses (i) through (vi) of this Section 8(d) occurs, provided, however, that for termination under any of subsections (i) – (vi) below, Dee must provide the Trust with a written notice of termination, specifying with particularity the events constituting Good Reason and the Trust shall have a period of 30 days to cure such events:
(i) Dee’s base salary is reduced from the amount in effect for the preceding year;
(ii) The Trust fails to provide the Plan Compensation contemplated by Section 3(b) (after such Plan Compensation has been adopted by the Board of Trustees or a committee thereof);
(iii) The Trust fails in any material respect to provide benefits in accordance with Section 4 or to consider the appropriateness of the split-dollar insurance in accordance with Section 5, in either case after Dee has given the Trust written notice of the failure, and the Trust has failed to effect a cure within 30 days after the notice is given;
(iv) Dee is removed from any of his Offices or responsibilities or his duties with the Trust are otherwise reduced to such an extent that he no longer has authority commensurate with an executive officer of the Trust (except as such removal and termination is permitted under this Agreement);
(v) Dee’s principal place of employment for the Trust is relocated outside of the Cleveland metropolitan area and, as a result, he is required to relocate outside the Cleveland metropolitan area; or
(vi) After a Shift in Ownership (as defined in Section 11), the Board of Trustees fundamentally changes its strategic plan in a manner opposed by Dee. Dee may not terminate his employment under this clause (vi) unless he first gives the Board of Trustees written notice of specifying the change or changes that he opposes and the steps that the Board of Trustees must take to rectify the strategic plan, and the Board of Trustees fails to take those steps within 30 days after the notice is given.
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termination (the “Termination Date”), the amounts and benefits provided in this Section 9.
(i) Base salary and bonus (cash and stock) at the rate in effect immediately before the Termination Date.
(ii) Those health and welfare benefits including contribution to any pension plan that were being provided to Dee immediately before the Termination Date through the Benefit Termination Date.
(iii) In addition to any benefits Dee is or may be entitled to under any retirement plan or program in which he participates, if after a Shift in Ownership an amount equal to three (3) times the total amount contributed by the Trust to Dee’s account under the pension plan and any excess benefit plan related thereto, with respect to the plan year immediately prior to the Termination Date provided such payment shall not be duplicative of any payment made or to be made under subsection (ii) above.
(iv) Continued vesting of share options held by Dee through the Benefit Termination Date and the ability to exercise vested options through the later to occur of the expiration date of the share options or the Benefit Termination Date, as if Dee had remained employed by the Trust.
(v) Continued earning of any restricted shares held by Dee. After the Termination Date, against delivery to the Trust of the certificate or certificates representing all of the restricted shares, the Trust will issue to Dee an unlegended certificate or certificates for the shares whose restrictions have lapsed. If the market price of the shares at the Benefit Termination Date exceeds the market price of the shares at the Termination Date, the Trust will promptly issue to Dee an unlegended certificate for the balance of the shares due to him.
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(vi) Continued accrual and vesting through the Benefit Termination Date of any Plan Compensation not referred to above and the ability to exercise vested awards through the later to occur of the expiration date of the awards or the Benefit Termination Date, as if Dee had remained employed by the Trust.
(vii) If termination occurs six months before or six months after a Shift of Ownership, the Trust shall pay to Dee the base salary and bonus in Section 9(b)(i) immediately in a lump sum; continue health and welfare benefits in Section 9(b)(ii) through the Benefit Termination Date; pay any pension or retirement plan payments in clause (ii) and (iii) of Section 9(b) immediately in a lump sum; all unvested share options in Section 9(b)(iv) shall become vested; all restrictions on restricted shares in Section 9(b)(v) shall lapse and an unlegended certificate for the shares whose restriction has lapsed shall be issued to Dee; and immediate accrual, vesting, and payment of all items under Section 9(b)(vi).
(d) FULL SATISFACTION. Payment and provision of the salary and benefits to which Dee is entitled under this Section 9 shall constitute full satisfaction of all obligations of the Trust to Dee arising under this Agreement and/or in connection with the termination of his employment. The Plan Compensation and any other benefits or compensation provided to Dee under this Section 9 shall not be subject to mitigation under any circumstances.
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(a) A “Shift in Ownership” shall be deemed to have occurred if at any time before the Termination Date any Person (other than the Trust, any subsidiary of the Trust, any employee benefit plan or employee share ownership plan of the Trust or any subsidiary of the Trust, or any person organized, appointed, or established by the Trust or any subsidiary of the Trust for or pursuant to the terms of any such plan), alone or together with any of its affiliates or associates:
(i) causes Dee not to be appointed as Chief Financial Officer, in accordance with the intent herein;
(ii) or, if Dee is appointed as Chief Financial Officer, causes Dee to be removed as Trustee and Chief Financial Officer, and such change is not supported by Dee.
(b) In the event of a Shift in Ownership of the Trust, (i) all share options then outstanding will become fully exercisable as of the date of the Shift in Ownership, (ii) all restrictions and conditions applicable to restricted stock and other stock awards will be deemed to have been satisfied as of the date of the Shift in Ownership, and (iii) all cash awards will be deemed to have been fully earned as of the date of the Shift in Ownership.
12. EXCESS PARACHUTE PAYMENT REDUCTION.
(a) Anything in this Agreement to the contrary notwithstanding, if it is determined that any payment or distribution by the Trust to or for the benefit of Dee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be nondeductible by the Trust for Federal income tax purposes because of Section 280G of the Internal Revenue Code and applicable regulations promulgated thereunder, then the aggregate present value of amounts payable or distributable to or for the benefit of Dee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as “Agreement Payments”) shall be reduced (but not below zero) to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be nondeductible by the Trust because of Section 280G of the Internal Revenue Code and applicable regulations promulgated thereunder. For purposes of this Section 12, present value shall be determined in accordance with Section 280G(d)(4) of the Internal Revenue Code and applicable regulations promulgated thereunder. All determinations required to be made under this Section 12 shall be made by the Accounting Firm (as defined in Section 12(b)) which shall provide detailed supporting calculations both to the Trust and Dee within 30 days after the Termination Date or such earlier time as is requested by the Trust. The Trust and Dee shall cooperate with each other and the Accounting Firm and will provide necessary information so that the Accounting Firm may make all such determinations. All such determinations by the Accounting Firm shall be final and binding upon the Trust and Dee. Dee shall determine which of the Agreement Payments (or, at the election of Dee, other payments) shall be eliminated or reduced consistent with the requirements of this Section 12, provided that, if Dee does not make such determination within 20 days of the receipt of the calculations made by the Accounting Firm, the Trust shall elect which of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 12, and shall notify Dee promptly of such election. All costs and expenses relating to the determinations to be made hereunder shall be
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borne solely by the Trust.
(b) The term “Accounting Firm” means the independent auditors of the Trust for the fiscal year preceding the year in which the Shift in Ownership occurred and such firm’s successor or successors; provided, however, if such firm is unable or unwilling to serve and perform in the capacity contemplated by this Agreement, Dee shall select another national or regional accounting firm of recognized standing to serve and perform in that capacity under this Agreement, except that such other accounting firm shall not be the then independent auditors for the Trust.
14. DEFERRAL OF PAYMENT OF COMPENSATION UNDER CERTAIN CIRCUMSTANCES.
(a) SECTION 162(M). For purposes of this Section 14, the term “Section 162(m)” shall mean Section 162(m) of the Internal Revenue Code (which, as amended by the Revenue Reconciliation Act of 1993, prescribes rules disallowing deductions for certain “applicable employee remuneration” to any of five specified “covered employees” of a publicly held corporation in excess of $1,000,000 per year), as from time to time amended, and the corresponding provisions of any similar law subsequently enacted, and to all regulations issued under that section and any such provisions.
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immediately prior to the Scheduled Time. Thereafter, the Trust will deliver to Dee a number of unrestricted shares equal to the number of restricted shares forfeited, together with an amount equal to any and all dividends that would have been paid on those shares from the Scheduled Time through the date of delivery, during the year that is determined by the Accounting Firm to be the first year following the Scheduled Time during which the unrestricted shares and dividends can be delivered without disallowance of the deduction for payment of the compensation by reason of Section 162(m). If the Accounting Firm determines that in any such year a portion, but not all, of the unrestricted shares and dividends can be delivered without disallowance of the deduction, the Trust will deliver to Dee the portion that can be so delivered, and, except as provided in Section 14(e) or Section 14(f), the remainder of the unrestricted shares and dividends will be delivered at a later date.
(f) DELIVERY OR PAYMENT FOLLOWING TERMINATION OF EMPLOYMENT IN ALL EVENTS. Within three months of the date on which Dee ceases to be employed as an officer by the Trust, the Trust will deliver to Dee all of the unrestricted shares and dividends not previously delivered to him under Section 14(c) and pay to Dee, in a single lump sum, all of the deferred compensation and interest not previously paid to him under Section 14(d), whether or not the Trust is entitled to a deduction with respect thereto.
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under this Section 14 may not be assigned by him unless approved by the Board of Trustees. If Dee dies before all unrestricted shares and dividends, and all deferred compensation and interest, under this Section 14 has been paid to him, any such unrestricted shares, dividends, deferred compensation, and interest shall be delivered and paid, at the same time it would have been paid if Dee had not died but had merely ceased to be an employee of the Trust on the date of his death (or, if earlier, on the last date he actually was an employee of the Trust), to his estate or, if Dee so directs the Trust in writing, to his wife or to a trust created by Dee. The obligations of the Trust to deliver unrestricted shares and dividends, and to pay deferred compensation and interest, under this Section 14 constitute unsecured promises of the Trust, and neither Dee nor any person claiming through him shall have, as a result of this Section 14, any lien or claim on any assets of the Trust that is superior to the claims of the general creditors of the Trust.
If to the Trust:
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
If to Dee:
Xx. Xxxx X. Xxx
00000 Xxxxxxxxxxx Xxxx
Xxxxx Xxxxxxx, Xxxx 00000
or such other address as either 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.
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19. MISCELLANEOUS. This Agreement may only be modified, waived, or discharged by the Board of Trustees and agreed to in a writing signed by Dee and the Trust. This Agreement shall inure to the benefit of Dee and his heirs and legal representatives. No waiver by either party hereto at any time of any breach by the other party 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 time or at any prior or subsequent time. No agreement or representation, oral or otherwise, express or implied, with respect to the subject matter hereof has been made by either party which is not set forth expressly in this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio. In the event legal action is instituted to enforce any provision of this Agreement, each party shall pay its own cost and expense thereof. Except as set forth in the Modification Agreement, dated the date hereof, between the Trust and Paragon Real Estate Development, L.L.C., an Ohio limited liability company, this Agreement constitutes the entire agreement between the parties with the subject matter hereof and all prior negotiations, discussions, and agreements on that subject matter are hereby superseded. This Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together, when executed and delivered, will constitute one and the same instrument.
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XXXX X. XXX |
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