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EXHIBIT 10.21
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
PAN PACIFIC RETAIL PROPERTIES, INC., a Maryland corporation (the
"Company") and XXXXXX X. XXXX ("Executive") have entered into that certain
Employment Agreement (the "Agreement") effective as of August 13, 1997. In order
to amend the Agreement in certain respects, the Company and Executive hereby
agree as follows effective as of __________________, 1998.
I.
Section 5.2(a) of the Agreement is hereby amended in its entirety
to read as follows:
(a) Amount. In the event the Company terminates Executive's
services hereunder pursuant to Section 5.1, Executive shall
continue to render services to the Company pursuant to this
Agreement until the date of termination and shall continue to
receive compensation, as provided hereunder, through the
termination date. In addition to other compensation payable to
Executive for services rendered through the termination date, the
Company shall pay Executive no later than the date of such
termination, as a single severance payment, an amount equal to
the sum of (i) three times Executive's highest annual Base
Compensation paid hereunder during the preceding twenty-four
month period (or, if Executive has been employed less than twelve
months, three times the amount of Base Compensation paid during
the period employed) plus (ii) three times the average annual
bonus (excluding any bonus payment deemed by the Compensation
Committee in its sole discretion to be a "Special Bonus")
received by the Executive during the preceding twenty-four month
period (or during the period the Executive has been employed
hereunder if shorter than twelve months) (the "Severance
Amount").
II.
Section 5.2(c) of the Agreement is hereby amended in its entirety
to read as follows:
(c) 280G "Gross-Up".
(i) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to Executive or for his benefit (whether paid or
payable or distributed or distributable) pursuant to the terms of
this Agreement or otherwise (the "Payment") would be subject to
the excise tax (the "Excise Tax") imposed by section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), then
Executive shall be entitled to receive from the Company an
additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment
retained by Executive after the calculation and deduction of all
Excise Taxes
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(including any interest or penalties imposed with respect to such
taxes) on the Payment and all federal, state and local income
tax, employment tax and Excise Tax (including any interest or
penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 5.2(c), shall be equal to
the Payment;
(ii) All determinations required to be made under this
Section 5.2(c), including whether and when the Gross-Up Payment
is required and the amount of such Gross-Up Payment, and the
assumptions to be used in arriving at such determinations shall
be made by the Accountants (as defined below) which shall provide
Executive and the Company with detailed supporting calculations
with respect to such Gross-Up Payment within fifteen (15)
business days of the receipt of notice from Executive or the
Company that Executive has received or will receive a Payment.
For the purposes of this Section 5.2(c), the "Accountants" shall
mean the Company's independent certified public accountants
serving immediately prior to the Change in Control (as defined in
Section 5.6). In the event that the Accountants are also serving
as accountant or auditor for the individual, entity or group
effecting the Change in Control, Executive shall appoint another
nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall
then be referred to as the Accountants hereunder). All fees and
expenses of the Accountants shall be borne solely by the Company
and it shall be the Company's obligation to cause the Accountants
to take any actions required hereby. For the purposes of
determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will
be treated as "parachute payments" within the meaning of section
280G of the Code, and all "parachute payments" in excess of the
"base amount" (as defined under section 280G(b)(3) of the Code)
shall be treated as subject to the Excise Tax, unless and except
to the extent that in the opinion of the Accountants such
Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for
services actually rendered (within the meaning of section
280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise
Tax. For purposes of determining the amount of the Gross-Up
Payment, Executive shall be deemed to pay Federal income taxes at
the highest applicable marginal rate of federal income taxation
for the calendar year in which the Gross-Up Payment is to be made
and to pay any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained
from the deduction of such state or local taxes if paid in such
year (determined without regard to limitations on deductions
based upon the amount of Executive's adjusted gross income), and
to have otherwise allowable deductions for federal, state and
local income tax purposes at least equal to those disallowed
because of the inclusion of the Gross-Up Payment in Executive's
adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Company
at the time Executive is entitled to receive the Payment and in
no event will any Gross-Up Payment be paid later than five
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days after the receipt by Executive of the Accountants'
determination. Any determination by the Accountants shall be
binding upon the Company and Executive. As a result of
uncertainty in the application of section 4999 of the Code at the
time of the initial determination by the Accountants hereunder,
it is possible that the Gross-Up Payment made will have been an
amount less than the Company should have paid pursuant to this
Section 5.2(c) (the "Underpayment"). In the event that the
Company exhausts its remedies pursuant to Section 5.2(c)(ii) and
Executive is required to make a payment of any Excise Tax, the
Underpayment shall be promptly paid by the Company to or for
Executive's benefit; and
(iii) Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable after
Executive is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which
such claim is requested to be paid. Executive shall not pay such
claim prior to the expiration of the 30-day period following the
date on which Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes,
interest and/or penalties with respect to such claim is due). If
the Company notifies Executive in writing prior to the expiration
of such period that it desires to contest such claim, Executive
shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim;
(B) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith in
order to effectively contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claims;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify Executive for and hold Executive harmless from, on an
after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such
representation and payment of all related costs and expenses.
Without limiting the foregoing provisions of this Section 5.2(c),
the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo
any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct Executive to pay the
tax claimed and xxx for a refund or contest the claim in any
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permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that
if the Company directs Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment to
Executive, on an interest-free basis, and shall indemnify
Executive for and hold Executive harmless from, on an after-tax
basis, any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to
such advance (including as a result of any forgiveness by the
Company of such advance); provided, further, that any extension
of the statute of limitations relating to the payment of taxes
for the taxable year of Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive shall
be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
III.
Section 5.6 of the Agreement is hereby amended in its entirety to
read as follows:
5.6 Change of Control. Executive may terminate this
Agreement, upon at least 10 days' prior written notice to the
Company at any time within one year after a "change in control"
(as hereinafter defined) of the Company. In the event Executive
terminates this Agreement within one year after a change in
control pursuant to this Section 5.6, (i) Executive shall
continue to render services pursuant hereto and shall continue to
receive compensation, as provided hereunder, through the
termination date, (ii) the Company shall pay Executive no later
than the date of such termination, as a single severance payment,
an amount equal to the Severance Amount and (iii) following such
termination, the Company shall provide the Severance Benefits as
required by Section 5.2(b). For purposes of this Agreement, a
"change in control" shall mean the occurrence of any of the
following events:
(a) the individuals constituting the Board as of
the date of the initial public offering of common stock of
the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that if the election, or nomination for election
by the Company's stockholders, of any new director was
approved by a vote of at least a majority of the Incumbent
Board, such new director shall be considered a member of
the Incumbent Board;
(b) provided that the number of shares of common
stock of the Company directly held by PPD and its
subsidiaries (other than the Company and the Company's
subsidiaries) represents 50% or less of the total
outstanding shares of common stock of the Company, an
acquisition
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of any voting securities of the Company (the "Voting
Securities") by any "person" (as the term "person" is used
for purposes of Section 13(d) or Section 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934
Act")) immediately after which such person has "beneficial
ownership" (within the meaning of Rule 13d-3 promulgated
under the 0000 Xxx) of 20% or more of the combined voting
power of the Company's then outstanding Voting Securities;
or
(c) approval by the stockholders of the Company of:
(i) a merger, consolidation, share exchange
or reorganization of the Company, unless the stock
holders of the Company, immediately before such
merger, consolidation, share exchange or
reorganization, own, directly or indirectly
immediately following such merger, consolidation,
share exchange or reorganization, at least 80% of
the combined voting power of the outstanding voting
securities of the corporation that is the successor
in such merger, consolidation, share exchange or
reorganization (the "Surviving Company") in
substantially the same proportion as their
ownership of the Voting Securities immediately
before such merger, consolidation, share exchange
or reorganization; or
(ii) a complete liquidation or dissolution
of the Company; or
(iii) an agreement for the sale or other
disposition of all or substantially all of the
assets of the Company.
Executed at Vista, California this ___ day of ________ 1998.
THE COMPANY
PAN PACIFIC RETAIL PROPERTIES, INC.
a Maryland Corporation
By:
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Xxxxx X. Xxxxxx
Executive Vice President
EXECUTIVE
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Xxxxxx X. Xxxx
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