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Exhibit 10(e)
CHANGE IN CONTROL AGREEMENT
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AGREEMENT by and between EastGroup Properties, a Maryland real
estate investment trust (the "Company"), with offices at 300 One Xxxxxxx Place,
000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000-0000, and ________________
(the "Executive"), an individual residing at
__________________________________________, dated as of the ____ day of
____________ 1997.
WHEREAS, the Company recognizes that the current business
environment makes it difficult to attract and retain highly qualified executives
unless a certain degree of security can be offered to such individuals against
organizational and personnel changes that frequently follow changes in control
of an organization; and
WHEREAS, even rumors of acquisitions or mergers may cause
executives to consider major career changes in an effort to assure financial
security for themselves and their families; and
WHEREAS, the Company desires to assure fair treatment of its
executives in the event of a Change in Control (as defined below) and to allow
them to make critical career decisions without undue time pressure and financial
uncertainty, thereby increasing their willingness to remain with the Company
notwithstanding the outcome of a possible Change in Control transaction; and
WHEREAS, the Company recognizes that its executives will be
involved in evaluating or negotiating any offers, proposals, or other
transactions that could result in Changes in Control of the Company and believes
that it is in the best interest of the Company and its stockholders for such
executives to be in a position, free from personal financial and employment
considerations, to be able to assess objectively and pursue aggressively the
interests of the Company's security holders in making these evaluations and
carrying on such negotiations; and
WHEREAS, the Board of Trustees (the "Board") of the Company
believes it is essential to provide the Executive with compensation arrangements
upon a Change in Control that provide the Executive with individual financial
security and that are competitive with those of other corporations, and, in
order to accomplish these objectives, the Board has caused the Company to enter
into this Agreement.
NOW THEREFORE, the parties, for good and valuable
consideration and intending to be legally bound, agree as follows:
1. OPERATION AND TERM OF AGREEMENT. This Agreement
shall be effective immediately upon its execution. This Agreement may be
terminated by the Company upon 24 months' advance written notice to the
Executive; PROVIDED, HOWEVER, that after a Change in Control of the Company
during the term of this Agreement, this Agreement shall remain
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in effect until all of the obligations of the parties under the Agreement are
satisfied and the Protection Period (as defined below) has expired. Prior to a
Change in Control this Agreement shall immediately terminate upon termination of
the Executive's employment or upon the Executive's ceasing to be an elected
officer of the Company, except in the case of such termination under
circumstances set forth in Section 2(e) below.
2. CERTAIN DEFINITIONS. The following words and phrases
shall have the meanings given for the purposes of this Agreement:
(a) "Cause" shall mean (i) the continued failure
by the Executive to perform his material responsibilities and duties toward the
Company (other than any such failure resulting from the Executive's incapacity
due to physical or mental illness); (ii) the engaging by the Executive in
willful or reckless conduct that is demonstrably injurious to the Company
monetarily or otherwise; (iii) the conviction of the Executive of a felony; or
(iv) the commission or omission of any act by the Executive that is materially
inimical to the best interests of the Company and that constitutes on the part
of the Executive common law fraud or malfeasance, misfeasance, or nonfeasance of
duty; provided, however, that "cause" shall not include the Executive's lack of
professional qualifications. For purposes of this Agreement, an act, or failure
to act, on the Executive's part shall be considered "willful" or "reckless" only
if done, or omitted, by him not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company. The Executive's
employment shall not be deemed to have been terminated for "cause" unless the
Company shall have given or delivered to the Executive (A) reasonable notice
setting forth the reasons for the Company's intention to terminate the
Executive's employment for "cause"; (B) a reasonable opportunity, at any time
during the 30-day period after the Executive's receipt of such notice, for the
Executive, together with his counsel, to be heard before the Board; and (C) a
Notice of Termination (as defined in Section 10 below) stating that, in the good
faith opinion of not less than a majority of the entire membership of the Board,
the Executive was guilty of the conduct set forth in clauses (i), (ii), (iii),
or (iv) of the first sentence of this Section 2(a).
(b) "Change in Control" shall mean a change in
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Company is then subject to such reporting requirements; provided that, without
limitation, a Change in Control shall be deemed to have occurred if (i) any
person (as such term is used in section 13(d) and 14(d) of the Exchange Act) is
or becomes beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30 percent or
more of the combined voting power of the Company's then outstanding securities;
or (ii) during any period of two consecutive years, the following persons (the
"Continuing Trustees") cease for any reason to constitute a majority of the
Board: individuals who at the beginning of such
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period constitute the Board and new trustees each of whose election to the Board
or nomination for election to the Board by the Company's security holders was
approved by a vote of at least two-thirds of the trustees then still in office
who either were trustees at the beginning of the period or whose election or
nomination for election was previously so approved; or (iii) the security
holders of the Company approve a merger or consolidation of the Company with any
other corporation, other than (A) a merger or consolidation that would result in
the voting securities of the Company outstanding immediately before the merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of such surviving entity) a majority of
the voting securities of the Company or of such surviving entity outstanding
immediately after such merger or consolidation or (B) a merger of consolidation
that is approved by a Board having a majority of its members persons who are
Continuing Trustees, of which Continuing Trustees not less than two-thirds have
approved the merger or consolidation; or (iv) the security holders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.
(c) "Code" shall mean the Internal Revenue Code
of 1986, as amended.
(d) "Disability," for purposes of this
Agreement, shall mean total disability as defined in any long-term disability
plan sponsored by the Company in which the Executive participates, or, if there
is no such plan or it does not define such term, then Disability shall mean the
physical or mental incapacity of the Executive that prevents the Executive from
substantially performing the duties of the office or position to which the
Executive was elected or appointed by the Board for a period of at least 180
days, which incapacity is expected to be permanent and continuous through the
Executive's 65th birthday.
(e) The "Change in Control Date" shall be any
date during the term of this Agreement on which a Change in Control occurs.
Notwithstanding any contrary provision in this Agreement, if the Executive's
employment or status as an elected officer with the Company is terminated by the
Company within six months before the date on which a Change in Control occurs,
and it is reasonably demonstrated that such termination (i) was at the request
of a third party who has taken steps reasonably calculated or intended to effect
a Change in Control or (ii) otherwise arose in connection with or anticipation
of a Change in Control, then for the purposes of this Agreement the "Change in
Control Date" shall mean the date immediately before the date of such
termination.
(f) "Good Reason" means:
(i) the assignment to the Executive
within the Protection Period of any duties inconsistent in any respect with the
Executive's position (including status, offices, titles and reporting
requirements, authority, duties, or responsibilities) or any
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other action that results in a diminution in such position, authority, duties,
or responsibilities excluding for this purpose an isolated, insubstantial, and
inadvertent action that is not taken in bad faith and is remedied by the Company
promptly after receipt of notice given by the Executive;
(ii) a reduction by the Company in the
Executive's base salary in effect immediately before the beginning of the
Protection Period or as increased from time to time after the beginning of the
Protection Period;
(iii) a failure by the Company to maintain
plans providing benefits at least as beneficial as those provided by any benefit
or compensation plan (including, without limitation, any incentive compensation
plan, bonus plan, or program, retirement, pension or savings plan, life
insurance plan, health and dental plan, or disability plan) in which the
Executive is participating immediately before the beginning of the Protection
Period or any action taken by the Company that would adversely affect the
Executive's participation in, or reduce the Executive's opportunity to benefit
under, any of such plans or deprive the Executive of any material fringe benefit
enjoyed by him immediately before the beginning of the Protection Period;
provided, however, that a reduction in benefits under the Company's
tax-qualified retirement, pension, or savings plans or its life insurance plan,
health and dental plan, disability plans, or other insurance plans, which
reduction applies generally to participants in the plans and has a de minimis
effect on the Executive shall not constitute "Good Reason" for termination by
the Executive;
(iv) the Company's requiring the
Executive, without the Executive's written consent, to be based at any office or
location in excess of 50 miles from his office location immediately before the
beginning of the Protection Period, except for travel reasonably required in the
performance of the Executive's responsibilities;
(v) any purported termination by the
Company of the Executive's employment for Cause otherwise than as referred to in
Section 10 of this Agreement; or
(vi) any failure by the Company to obtain
the assumption of the obligations contained in this Agreement by any successor
as contemplated in Section 9(c) of this Agreement.
(g) "Parent" means any entity that directly or
indirectly through one or more other entities owns or controls more than 50
percent of the voting securities or shares of beneficial interest of the
Company.
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(h) "Protection Period" means the period
beginning on the Change in Control Date and ending on the last day of the 36th
calendar month following the Change in Control Date.
(i) "Subsidiary" means a company 50 percent or
more of the voting securities of which are owned, directly or indirectly, by the
Company.
3. BENEFITS UPON TERMINATION UNDER CERTAIN CIRCUMSTANCES
WITHIN THE PROTECTION PERIOD. If the Executive's employment is terminated by the
Company during the Protection Period other than for Cause or Disability and
other than as a result of the Executive's death, or if the Executive terminates
his employment during the Protection Period for Good Reason, the Company shall,
subject to Section 7, pay to the Executive in a lump sum in cash within ten days
after the date of termination the aggregate of the following amounts and shall
provide the following benefits:
(a) The Executive's base salary and vacation pay
(for vacation not taken) accrued but unpaid through the date of termination of
employment; and
(b) A lump sum severance payment in an amount
equal to the product of 2.99 times the Executive's "Average Annual
Compensation." For the purposes of this Agreement, "Average Annual Compensation"
shall be an amount equal to the annual average of the sums of (i) the
Executive's annual base salary from the Company plus (ii) the amount of bonus
accrued by the Company for the Executive, in each case for the three calendar
years that ended immediately before (or, if applicable, coincident with) the
Change in Control Date; and
(c) Within 30 days of the date of termination of
employment, upon surrender by the Executive of the outstanding options to
purchase shares of beneficial interest of the Company ("Shares of Beneficial
Interest") granted to the Executive by the Company (the "Outstanding Options")
and any stock appreciation rights granted to the Executive by the Company
("SARs"), an amount with respect to each Outstanding Option and SAR (whether
vested or not) equal to the difference between the exercise price of such
Outstanding Options and SARs and the higher of (x) the fair market value of the
Shares of Beneficial Interest on the date of such termination (but not less than
the closing price for the Shares of Beneficial Interest on the New York Stock
Exchange, or such other national stock exchange on which such shares may be
listed, on the last trading day such shares traded prior to the date of
termination); and (y) the highest price paid for Shares of Beneficial Interest
or, in the cases of securities convertible into Shares of Beneficial Interest or
carrying a right to acquire Shares of Beneficial Interest, the highest effective
price (based on the prices paid for such securities) at which such securities
are convertible into Shares of Beneficial Interest or at which Shares of
Beneficial Interest may be acquired, by any person or group whose acquisition of
voting securities has resulted in a Change in Control of the Company;
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PROVIDED, HOWEVER, that this Section 3(c) shall not apply to the surrender of
any Outstanding Option that is an incentive stock option (within the meaning of
section 422 of the Code); and
(d) The Company shall provide the Executive with
life insurance coverage and health plan coverage substantially comparable to the
coverage the Executive was receiving from the Company immediately before
termination of employment; the provision of such coverage will continue until
the expiration of the 36-calendar month period following the date of the
termination of the Executive's employment, or, if earlier, until the date on
which the Executive becomes eligible for comparable coverage in connection with
subsequent employment, provided, however, that if such coverage is not available
under the plans covering the Company's employees, the Company may, at its
option, substitute for the provision of such coverage monthly payments to the
Executive for the same period in an amount equal to the reasonable monthly cost
of securing comparable coverage for an individual of the Executive's age on a
standard risk basis; and
(e) All of the Executive's benefits accrued
under any supplemental retirement plans, excess retirement plans, and deferred
compensation plans maintained by the Company or any of its Subsidiaries shall
become immediately vested in full; and
(f) All of the Executive's Outstanding Options
shall become immediately vested and exercisable in full.
4. BENEFITS ON VOLUNTARY TERMINATION WITHIN SIX MONTHS.
(a) If, during the period beginning on the
Change in Control Date and ending on the last day of the sixth calendar month
following the Change in Control Date, the Executive voluntarily terminates his
employment with the Company without Good Reason and other than for Disability,
as a result of his death, or in anticipation of a termination for Cause, then
the Company shall, subject to Section 7, make severance payments to the
Executive for a period of 36 months beginning with the calendar month following
the date of termination, with each monthly payment equal to one-twelfth of the
Executive's Average Annual Compensation, subject to paragraph (b).
(b) If the Executive receives any remuneration
in the form of wages, salary, or consulting fees from another employer or income
from self employment (excluding investment income) for employment, services, or
self-employment during the 36-month severance pay period, the Company's
obligation under paragraph (a) above shall be reduced by one-half the amount of
such remuneration. For the purpose of this reduction, the Company's 36-month
severance pay obligation shall be considered as an aggregate amount. The
Executive shall report to the Company by the 15th day of each month after the
termination of his employment the amount of such remuneration the Executive
received during the preceding month, and the Executive shall deliver to the
Company a copy of his
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federal income tax return for each of the calendar years containing a portion of
the severance pay period.
(c) The Company shall, within 30 days of the
termination of the Executive's employment under circumstances described in
paragraph (a), enter into an agreement with a trustee and establish a trust for
the purpose of assisting the Company meet its obligation to the Executive under
paragraph (a) and deposit with the trustee an amount equal to the present value
of the Company's obligation to the Executive under paragraph (a) (disregarding
paragraph (b) solely for the purpose of the present value calculation) on that
date. The trust shall be a grantor trust, within the meaning of subchapter J,
chapter 1, subtitle A of the Code, of which the Company is grantor, and the
assets of the trust shall be subject to the claims of the Company's creditors in
the event of insolvency.
The Company shall remain liable to satisfy
its obligations under paragraph (a), which may be satisfied with the assets of
the trust. The trust agreement shall provide that all amounts remaining in the
trust fund upon the satisfaction of the Company's obligation to the Executive
under paragraph (a) shall be returned to the Company.
To the extent the Executive acquires a right
to receive payments from the Company under paragraph (a), the right shall be no
greater than the right of any unsecured creditor of the Company. The Company and
Executive acknowledge it is their intent and they agree that for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended, and
for purposes of the Code and for all other purposes, this Agreement and any
trust the Company may establish pursuant to this paragraph (c) constitute an
unfunded arrangement maintained for the purpose of providing compensation for an
individual who is a member of a select group of management or highly compensated
employees.
5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive, or other plans, practices, policies, or programs
provided by the Company or any of its Subsidiaries and for which the Executive
may qualify, nor shall anything in this Agreement limit or otherwise affect such
rights as the Executive may have under any stock option or other agreements with
the Company or any of its Subsidiaries. Any amount of vested benefit or any
amount to which the Executive is otherwise entitled under any plan, practice,
policy, or program of the Company or any of its Subsidiaries shall be payable in
accordance with the plan, practice, policy, or program; PROVIDED, HOWEVER, that
if the Executive is entitled to benefits under Section 3 or 4, the Executive
shall not be entitled to severance pay, or benefits similar to severance pay,
under any plan, practice, policy, or program generally applicable to employees
of the Company or any of its Subsidiaries. The provision of severance pay or
other benefits pursuant to Section 3 or 4 shall not be deemed to be a
continuance of the Executive's employment for any purposes.
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6. FULL SETTLEMENT; NO OBLIGATION TO SEEK OTHER EMPLOYMENT;
LEGAL EXPENSES. The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations under this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense, or
other claim, right, or action the Company may have against the Executive or
others. The Executive shall not be obligated to seek other employment or take
any action other than as provided in Section 4(b) by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement.
The Company agrees to pay, upon written demand by the Executive, all legal fees
and expenses the Executive may reasonably incur as a result of any dispute or
contest (regardless of outcome) by or with the Company or others regarding the
validity or enforceability of, or liability under, any provision of this
Agreement. In any such action brought by the Executive for damages or to enforce
any provisions of this Agreement, the Executive shall be entitled to seek both
legal and equitable relief and remedies, including, without limitation, specific
performance of the Company's obligations under this Agreement, in the
Executive's sole discretion.
7. CUT BACK IN BENEFITS. Notwithstanding any other provision
of this Agreement, the cash lump sum payment and other benefits or severance pay
otherwise to be provided pursuant to Section 3 or 4 of this Agreement, as
applicable, (the "Severance Benefit") shall be reduced as described below if the
Company would, by reason of section 280G of the Code, not be entitled to deduct
for federal income tax purposes any part of the Severance Benefit or any part of
any other payment or benefit to which Executive is entitled under any plan,
practice, policy, or program. For the purposes of this Agreement, the Company's
independent auditors shall determine the value of any deferred payments or
benefits in accordance with the principles of section 280G of the Code, and tax
counsel selected by the Company's independent auditors and acceptable to the
Company shall determine the deductibility of payments and benefits to which the
Executive is entitled. The Severance Benefit shall be reduced only to the extent
required, in the opinion of such tax counsel, to prevent such nondeductibility
of any part of the remaining Severance Benefit and other payments and benefits
to which the Executive is entitled. The Company shall determine which elements
of the Severance Benefit shall be reduced to conform to the provisions of this
Section 7. Any determination made by the Company's independent auditors or by
tax counsel pursuant to this Section 7 shall be conclusive and binding on the
Executive.
8. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge, or data relating to the Company or any of its
Subsidiaries, and their respective businesses, obtained by the Executive during
the Executive's employment by the Company or any of its Subsidiaries and that
has not become public knowledge (other than by acts of the Executive or his
representatives in violation of this Agreement). After the date of termination
of the Executive's employment with the Company, the Executive shall not, without
the prior written
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consent of the Company, communicate or divulge any such information, knowledge,
or data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 8 constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
9. SUCCESSORS.
(a) This Agreement is personal to the Executive
and shall not be assignable by the Executive other than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives or successors in interest.
The Executive may designate a successor or successors in interest to receive any
and all amounts due the Executive under this Agreement after the Executive's
death. A designation of a successor in interest shall be made in writing, signed
by the Executive, and delivered to the Company pursuant to Section 13(b). This
Section 9(a) shall not supersede any designation of beneficiary or successor in
interest made by the Executive or provided for under any other plan, practice,
policy, or program of the Company.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
(c) The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business or assets of the Company and any
Parent of the Company or any successor and without regard to the form of
transaction utilized to acquire the business or assets of the Company, to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession or
parentage had taken place. As used in this Agreement, "Company" shall mean the
Company as defined above and any successor to its business or assets as
aforesaid (and any Parent of the Company or any successor) that is required by
this clause to assume and agree to perform this Agreement or that otherwise
assumes and agrees to perform this Agreement.
10. NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party given in accordance
with Section 13(b) of this Agreement. For purposes of this Agreement, a "Notice
of Termination" means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the date of termination is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen days after the giving of such notice). The failure by the Executive to
set forth in the Notice of Termination
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any fact or circumstance that contributes to a showing of Good Reason shall not
waive any right of the Executive under this Agreement or preclude the Executive
from asserting such fact or circumstance in enforcing his rights.
11. REQUIREMENTS AND BENEFITS IF EXECUTIVE IS EMPLOYEE OF
SUBSIDIARY OF COMPANY. If the Executive is an employee of any Subsidiary of the
Company, he shall be entitled to all of the rights and benefits of this
Agreement as though he were an employee of the Company and the term "Company"
shall be construed to include the Subsidiary by which the Executive is employed.
The Company guarantees the performance of its Subsidiary under this Agreement.
12. DISPUTE RESOLUTION. The Company and the Executive shall
attempt to resolve between them any dispute that arises under this Agreement. If
they cannot agree within ten days after either party submits a demand for
arbitration to the other party, then the issue shall be submitted to arbitration
with each party having the right to appoint one arbitrator and those two
arbitrators mutually selecting a third arbitrator. The rules of the American
Arbitration Association for the arbitration of commercial disputes shall apply
and the decision of two of the three arbitrators shall be final. The arbitrators
must reach a decision within 60 days after the selection of the third
arbitrator. The arbitration shall take place in Jackson, Mississippi. The
arbitrators shall apply Mississippi law.
13. MISCELLANEOUS.
(a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Mississippi, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the Agreement and shall have no force or effect. This Agreement may
be amended or modified only by a written agreement executed by the parties or
their respective successors and legal representatives.
(b) All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt requested,
postage prepaid, to the addresses for each party as first written above or to
such other address as either party shall have furnished to the other in writing
in accordance with this Section 13. Notices and communications to the Company
shall be addressed to the attention of the Company's Corporate Secretary. Notice
and communications shall be effective when actually received by the addressee.
(c) Whenever reference is made in this Agreement
to any specific plan or program of the Company, to the extent that the Executive
is not a participant in the plan or program or has no benefit accrued under it,
whether vested or contingent, as of the Change in Control Date, then such
reference shall be null and void and the Executive shall acquire no additional
benefit as a result of such reference.
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(d) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(e) The Company may withhold from any amounts
payable under this Agreement such federal, state, or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(f) The Company's or the Executive's failure to
insist upon strict compliance with any provision of this Agreement shall not be
construed to be a waiver of such provision or any other provision.
(g) Except in the case of termination of
employment or elected officer status under the circumstances set forth in
Section 2(e) above, upon a termination of the Executive's employment or upon the
Executive's ceasing to be an elected officer of the Company, in each case, prior
to the Change in Control Date, there shall be no further rights under this
Agreement.
IN WITNESS WHEREOF, the Executive has set his hand to this
Agreement and, pursuant to the authorization from the Board, the Company has
caused this Agreement to be executed as of the day and year first above written.
EASTGROUP PROPERTIES
By____________________________________
EXECUTIVE
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