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EXHIBIT 10.3
(Form of Agreement for Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxx)
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, is between Developers Diversified Realty Corporation,
an Ohio corporation (the "Employer"), and _______________ (the "Executive") made
this 24th day of March, 1999.
RECITALS
A. Executive is presently employed by Employer as its _________________
B. Employer wishes to induce Executive to continue as its
________________ 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 _______________________________-
NOW THEREFORE, IN CONSIDERATION OF EXECUTIVE CONTINUING AS THE
________________________________________ 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. 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
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(iii) the dissolution of Employer.
2. A "Triggering Event" for the purpose of this Agreement will be
deemed to have occurred if:
(a) Within three 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 three 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 three 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 three 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 three 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. 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
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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) three times Executive's Annual Bonus plus (ii) three
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
SETOFF
No amounts otherwise due or payable under this Agreement will be
subject to setoff or counterclaim by either party hereto.
ARTICLE IV
TAX ADJUSTMENT PAYMENTS
If all or any portion of the amounts payable to the Executive under
this Agreement (together with all other payments of cash or property, whether
pursuant to this Agreement or otherwise, including, without limitation, the
issuance of common stock of the Company, or the granting, exercise or
termination of options therefor) constitutes "excess parachute payments" within
the meaning of Section 280G of the Code that are subject to the excise tax
imposed by Section 4999 of the Code (or any similar tax or assessment), the
amounts payable hereunder shall be increased to the extent necessary to place
the Executive in the same after-tax position as he would have been in had no
such tax assessment been imposed on any such payment paid or payable to the
Executive under this Agreement or any other payment that the Executive may
receive in connection therewith. The determination of the amount of any such tax
or assessment and the incremental payment required hereby in connection
therewith shall be made by the accounting firm employed by the Executive within
thirty (30) calendar days after such payment and said incremental payment shall
be made within five (5) calendar days after determination has been made. If,
after the date upon which the payment required by this Article IV has been made,
it is determined (pursuant to final regulations or published rulings of the
Internal Revenue Service, final judgment of a court of competent jurisdiction,
Internal Revenue Service audit assessment, or otherwise) that the amount of
excise or other similar taxes or assessments payable by the Executive is greater
than the amount initially so determined, then the Company shall pay the
Executive an amount equal to the sum of: (i) such additional excise or other
taxes, PLUS (ii) any interest, fines and penalties resulting from such
underpayment, PLUS (iii) an amount necessary to reimburse the Executive for any
income, excise or other tax assessment payable by the Executive with respect to
the amounts specified in (i) and (ii) above, and the reimbursement provided by
this clause (iii), in the manner described above in this Article IV. Payment
thereof shall be made within five (5) calendar days after the date upon which
such subsequent determination is made.
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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 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.
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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:
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.
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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
By________________________
__________________________
EXECUTIVE
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