CHANGE OF CONTROL AGREEMENT
This Agreement dated as of November 6, 1996 between HRE Properties (the
"Trust") and Willing X. Xxxxxx ("Employee") .
The Employee is currently employed by the Trust and the Employee's
services are valued by the Trust.
The Trust recognizes that the possibility of a change of control of the
Trustmay result in the departure or distraction of the Employee, to the
detriment of the Trust and its shareholders.
The Trust wishes to assure the Employee of fair severance should his
employment terminate in certain specified circumstances following a change of
control.
In consideration of the Employee's continued employment by the Trust, and
for other good and valuable consideration, the parties hereto hereby agree as
follows:
1. Termination Benefits. If the employment of the Employee is terminated
by the Employee for Good Reason or by the Trust for any reason other
than for Cause, within 18 months following a Change of Control,
(a) the Trust shall pay Employee an amount equal to 12 months of
Employee's rate of base salary (exclusive of any bonus or other
benefit) in effect at the date of the Change of Control. Such amount
shall be payable in cash in a lump sum within 45 days after such
termination; and
(b) the Trust shall continue in force and effect for 12 months after
termination (the "Continuation of Benefits Period") and at the same
level and for the benefit of the Employee's family, where applicable,
all life insurance, disability, medical and other benefit programs or
arrangements in which the Employee is participating or to which the
Employee is entitled at the date of the Change of Control, provided that
the Employee's continued participation is possible under such programs
and arrangements. In the event that such continued participation is not
possible, the Trust shall arrange to provide the Employee with benefits
similar to those which Employee would be entitled to receive under such
programs and arrangements. Without limiting the foregoing, the benefits
continuation shall include a lump sum cash payment to the Employee
within 45 days of such termination in lieu of Trust contributions on
behalf of the Employee under the HRE Properties Profit Sharing and
Savings Plan. The amount of such payment shall be the product of (i)
the number of months in the Continuation of Benefits Period and (ii)
1/12 of 5% (or such other percentage reflected in the Trust's most
recent annual contribution determined prior to the Change of Control)
times the Employee's annual salary rate in effect immediately prior to
the termination date or, if greater, the Employee's annual salary rate
in effect immediately prior to the Change of Control.
Payments under this Section 1 shall be reduced to the extent, but only
to the extent, necessary to provide that no "payment in the nature of
compensation" to (or for the benefit of) the Employee which is
"contingent"on the Change of Control would fail to be deductible for
federal income tax purposes by reason of section 28OG of the Internal
Revenue Code of 1986, as amended (the "Code"). As used in this Section
the words "payment in the nature of compensation" and "contingent" shall
be construed and applied in a manner consistent with the meaning of
those words under section 28OG of the Code and regulations thereunder.
The determination as to whether and to what extent a reduction in
payments under this Section 1 is necessary to
avoid the nondeductibility of any payment under section 28OG of the
Code shall be made at the Trust's expense by Xxxxxx Xxxxxxxx & Co.
or by such other certified public accounting firm as the
Compensation Committee of the Trustees may designate prior to a Change of
Control. In the event of any underpayment or overpayment under this
Section 1, as determined by Xxxxxx Xxxxxxxx & Co. (or such other firm
as may have been designated in accordance with the preceding sentence),
the amount shall forthwith be paid to the Employee or refunded to the
Trust, as the case may be, with interest at the applicable federal rate
provided for in section 7872(f)(2) of the Code.
2. Definitions.
The definitions in Appendix A are hereby incorporated in this Agreement.
3. No Duty to Mitigate Damages. The Employee's benefits under this
Agreement shall be considered severance pay in consideration of his past
service and his continued service from the date of this Agreement, and
his entitlement thereto shall neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any
compensation which he may receive from future employment.
4. Withholding. Anything herein to the contrary notwithstanding, all
payments required to be made by the Trust hereunder to the Employee
shall be subject to the withholding of such amounts, if any, relating to
tax and other payroll deductions as the Trust may reasonably determine
it should withhold pursuant to any applicable law or regulation.
5. Legal Fees and Expenses; Interest. The Trust shall pay all reasonable
legal fees and expenses incurred by the Employee in successfully
obtaining any right or benefit to which the Employee is entitled under
this Agreement. Any amount payable under this Agreement that is not
paid when due shall accrue interest at the base rate as from time to
time in effect at The Bank of New York, until paid in full.
6. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in New
York City in accordance with the rules of the American Arbitration
Association then in effect. The parties shall attempt to select a
mutually agreeable arbitrator who shall promptly convene a hearing to
resolve submitted disputes. If the parties are unable to agree upon
such an arbitrator within 20 days from initial contact, the American
Arbitration Association shall be requested by either party to submit a
list of at least seven arbitrators from which the parties shall attempt
to select one by agreement. In the event they do not so agree, they
shall alternately strike names from this list beginning with the
Employee, until a single name remains. The remaining person shall be
appointed to hear and decide the parties' disputes, drawing his
authority and the bases for decision from this Agreement. The
arbitrator will resolve all submitted matters in a written decision with
expedition. Judgment may be entered on the arbitrator's award in any
court having jurisdiction.
7. Notices. All notices shall be in writing and shall be deemed given five
days after mailing in the continental United States by registered or
certified mail, or upon personal receipt after delivery, telex, telecopy
or telegram, to the party entitled thereto at the address stated below
or to such changed address as the addressee may have given by a similar
notice:
To the Trust: HRE Properties
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
To the Employee: At his home address,
as last shown on the
records of the Trust
8. Severability. In the event that any provision of this Agreement shall
be determined to be invalid or unenforceable, such provision shall be
enforceable in any other jurisdiction in which valid and enforceable and
in any event the remaining provisions hereof shall remain in full force
and effect to the fullest extent permitted by law.
9. Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties and be enforceable by the Employee's personal
or legal representatives or successors. If the Employee dies while any
amounts would still be payable to him hereunder, such amounts shall be
paid to the Employee's estate. This Agreement shall not otherwise be
assignable by the Employee.
10. Successors. This Agreement shall inure to and be binding upon the
Trust's successors. The Trust will require any successor to all or
substantially all of the businesses and/or assets of the Trust by sale,
merger (where the Trust is not the surviving entity), lease or
otherwise, to assume expressly this Agreement. If the Trust shall not
obtain such agreement prior to the effectiveness of any such succession,
the Employee shall have all rights resulting from termination of the
Employee's employment under this Agreement. This Agreement shall not
otherwise be assignable by the Trust.
11. Amendment or Modification; Waiver. This Agreement may not be amended
unless agreed to in writing by the Employee and the Trust. No waiver by
either party of any breach of this Agreement shall be deemed a waiver of
a subsequent breach.
12. Continued Employment. This Agreement shall not confer upon the Employee
any right of continued or future employment by the Trust or any right to
compensation or benefits from the Trust except the right specifically
stated herein to certain severance benefits, and shall not limit the
right of the Trust to terminate the Employee's employment at any time,
except as may be otherwise provided in a written employment agreement
between the Trust and the Employee.
13. Governing Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the laws of The
Commonwealth of Massachusetts.
14. Liability of Shareholders. This Agreement is executed by or on behalf
of the Trustees of the Trust solely in their capacity as such Trustees,
and shall not constitute their personal obligation either jointly or
severally in their individual capacities. The shareholders, Trustees,
officers or agents of the Trust shall not be personally liable for any
obligations of the Trust under this Agreement and all parties hereto
shall look solely to the property of the Trust for the payment of any
claim hereunder.
IN WITNESS WHEREOF the parties have duly executed the Agreement as of
the above date.
Employee
HRE PROPERTIES
By: Title: Chairman
APPENDIX A TO CHANGE OF CONTROL AGREEMENT
"Change of Control" shall mean the occurrence of any one of the
following events:
(a) any Person becomes the owner of 20% or more of the Trust's Common Shares
and thereafter individuals who were not Trustees of the Trust prior to
the date such Person became a 20% owner are elected as Trustees pursuant
to an arrangement or understanding with, or upon the request of or
nomination by, such Person and constitute at least two of the Trustees;
or
(b) there occurs a change of control of the Trust of a nature that would be
required to be reported in response to Items la of Form 8-K pursuant to
Section 13 or 15 under the Securities Exchange Act of 1934 ("Exchange
Act"), or in any other filing by the Trust with the Securities and
Exchange Commission (the "Commission"); or
(c) there occurs any solicitation of proxies by or on behalf of any Person
other than the Trustees of the Trust and thereafter individuals who were
not Trustees prior to the commencement of such solicitation are elected
as Trustees pursuant to an arrangement or understanding with, or upon
the request of or nomination by, such Person and constitute at least two
of the Trustees.
(d) the Trust executes an agreement of acquisition, merger or consolidation
which contemplates that (i) after the effective date provided for in the
agreement, all or substantially all of the business and/or assets of the
Trust shall be owned, leased or otherwise controlled by another
corporation or other entity and (ii) individuals who are trustees of the
Trust when such agreement is executed shall not constitute a majority of
the trustees or board of directors of the survivor or successor entity
immediately after the effective date provided for in such agreement;
provided, however, for purposes of this paragraph (c) that if such
agreement requires as a condition precedent approval by the Trust's
shareholders of the agreement or transaction, a Change of Control shall
not be deemed to have taken place unless and until such approval is
secured.
"Common Shares" shall mean the then outstanding Common Shares of the
Trust plus, for purposes of determining the ownership of any Person,
the number of unissued shares of Common Shares which such Person has the
right to acquire
(whether such right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise.
"Person" shall have the meaning used in Section 13(d) of the Exchange
Act, as in effect on December 31, 1984. A Person shall be deemed to be
the "owner" of any Common Shares:
(a) of which such Person would be the "beneficial owner", as such term is
defined in Rule 13d-3 promulgated by the Commission under the Exchange
Act, as in effect on December 31, 1984; or
(b) of which such Person would be the "beneficial owner", as such term is
defined under Section 16 of the Exchange Act and the rules of the
Commission promulgated thereunder, as in effect on December 31, 1984; or
(c) which such Person or any of its Affiliates or Associates (as such terms
are defined in Rule 12b-2 promulgated by the Commission under the
Exchange Act, as in effect on December 31, 1984), has the right to
acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise.
Termination for "Cause" shall mean termination of the Employee's employment
by the Trust because of dishonesty, conviction of a felony, gross neglect
of duties (other than as a result of disability or death), or conflict
of interest(other than any conflict of interest which has been fully
disclosed to the Trustees and has been determined by them not to be
material), which, in the case of gross neglect or conflict, shall continue
for 30 days after the Trust gives written notice to the Employee
requesting the cessation of such gross neglect or conflict, as the case
may be.
Termination for "Good Reason" shall have the following meanings.
Termination for "Good Reason" shall mean the voluntary termination by
the Employee of his employment within 90 days after the occurrence of
any one of the following events without the Employee's express written
consent:
(a) the assignment to him of any duties inconsistent with his positions,
duties, responsibilities, reporting requirements, and status with the
Trust immediately prior to a Change of Control, or a substantive change
in the Employee's titles or offices as in effect immediately prior
to a Change of Control, or any removal of the Employee from or any
failure to reelect him to such positions, except in connection
with the termination of the Employee's employment by the Trust
for Cause or by the Employee other than for Good Reason;
or any other action by the Trust which
results in a diminishment in such position, authority, duties or
responsibilities, other than an insubstantial and inadvertent action
which is remedied by the Trust promptly after receipt of notice thereof
given by the Employee; or
(b) if the Employee's base salary for any fiscal year is less than 100
percent of the base salary paid to the Employee in the completed fiscal
year immediately preceding the Change of Control, or if the Employee's
total cash compensation opportunities, including salary and incentives,
for any fiscal year are less than 100 percent of the total cash
compensation opportunities made available to the Employee in the
completed fiscal year immediately preceding the Change of Control; or
(c) the failure of the Trust to continue in effect any benefits or
perquisites, or any pension, life insurance, medical insurance or
disability plan in which the Employee was participating immediately
prior to a Change of Control unless the Trust provides the Employee
with a plan or plans that provide substantially similar benefits, or
the taking of any action by the Trust that would adversely affect the
Employee's participation in or materially reduce the Employee's
benefits under any of such plans or deprive the Employee of
any material fringe benefit enjoyed by the Employee
immediately prior to a Change of Control; or
(d) any relocation of the Employee outside Manhattan in New York City; or
(e) the Trust sells or otherwise disposes of, in one transaction or a
series of related transactions, assets or earning power aggregating
more than 50% of the assets (taken at asset value as stated on the
books of the Trust determined in accordance with generally accepted
accounting principles consistently applied) or earning power of the
Trust to any other Person or Persons; or
(f) any other breach by the Trust of any provision of this Agreement,
provided that the same shall have continued unremedied for a period of
30 days after the Employee gives notice to the Trust requesting that
the Trust remedy the same.
