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Exhibit 10.2
EMPLOYMENT AGREEMENT
BETWEEN
DEVELOPERS DIVERSIFIED REALTY CORPORATION
AND
XXXXX X. XXXXXX
2
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is entered into as of the 2nd day of
April, 1999 between Developers Diversified Realty Corporation, an Ohio
corporation ("the Company"), and Xxxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H :
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WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, on the terms and subject to the
conditions set forth herein;
WHEREAS, the Company and the Executive desire for this
Agreement to amend and supercede the Employment Agreement, dated as of January
1, 1993, between the Company and the Executive;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. EMPLOYMENT.
(a) The Company hereby employs the Executive as its
Chief Investment Officer and the Executive hereby accepts such employment, on
the terms and subject to the conditions hereinafter set forth.
(b) During the term of this Employment Agreement and
any renewal hereof (all references herein to the term of this Employment
Agreement shall include references to the period of renewal hereof, if any), the
Executive shall be and have the title of Chief Investment Officer and shall
devote substantially all of his business time and all reasonable efforts to his
employment and perform diligently such duties as are customarily performed by
Chief Investment Officers of companies similar in size to the Company, together
with such other duties as may be reasonably requested from time to time by the
Board of Directors of the Company (the "Board"), which duties shall be
consistent with his positions as set forth above and as provided in Paragraph 2.
2. TERM AND POSITIONS.
(a) Subject to the provisions for renewal and
termination hereinafter provided, (i) the term of this Employment Agreement
shall begin on the date hereof and shall continue for the current "fiscal year"
(as hereinafter defined) and for the succeeding two fiscal years and (ii) as of
December 31, 2001, and the first day of each succeeding fiscal year thereafter,
such term automatically shall be extended for one (1) additional fiscal year,
beginning with the fiscal year commencing January 1, 2002, and continuing
thereafter. This Employment Agreement may be terminated at any time as provided
in Paragraph 5 or by either the Company or the Executive upon one fiscal year's
prior written notice of termination of this Employment Agreement given to the
other at least thirty (30) days before January 1, 2000, or the beginning of any
such succeeding fiscal year (for example, unless such written notice of
termination is given on or prior to December 2, 1999, the term of this
Employment Agreement automatically will be extended, effective January 1, 2000,
until the end of the second fiscal year succeeding the fiscal year including
such date). The term "fiscal year" means the period beginning on the
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day after the Saturday closest to January 1, in one year and ending on the
Saturday closest to December 31 in the next year.
(b) The Executive shall be entitled to serve as the
Chief Investment Officer of the Company. For service as a director, officer and
employee of the Company, the Executive shall be entitled to the full protection
of the applicable indemnification provisions of the articles of incorporation
and code of regulations of the Company, as the same may be amended from time to
time.
(c) If:
(i) the Company materially changes the Executive's
duties and responsibilities as set forth in Paragraphs 1(b)
and 2(b) without his consent;
(ii) the Executive's place of employment or the
principal executive offices of the Company are located more
than fifty (50) miles from the geographical center of
Cleveland, Ohio; or
(iii) there occurs a material breach by the Company
of any of its obligations under this Employment Agreement,
which breach has not been cured in all material respects
within ten (10) days after the Executive gives notice thereof
to the Company.
then in any such event the Executive shall have the right to terminate his
employment with the Company, but such termination shall not be considered a
voluntary resignation or termination of such employment or of this Employment
Agreement by the Executive but rather a discharge of the Executive by the
Company without "cause" (as defined in Paragraph 5(a)(ii)).
(d) The Executive shall be deemed not to have
consented to any written proposal calling for a material change in his duties
and responsibilities unless he shall give written notice of his consent thereto
to the Board within fifteen (15) days after receipt of such written proposal. If
the Executive shall not have given such consent, the Company shall have the
opportunity to withdraw such proposed material change by written notice to the
Executive given within ten (10) days after the end of said fifteen (15) day
period.
(e) At all times during the term of his employment
hereunder, the Executive shall be entitled to nominate himself to the Board, and
the Company shall take all actions required for the Executive to be elected to
the Board.
3. COMPENSATION.
During the term of this Employment Agreement the
Company shall pay or provide, as the case may be, to the Executive the
compensation and other benefits and rights set forth in this paragraph 3.
(a) The Company shall pay to the Executive a base
salary payable in accordance with the Company's usual pay practices (and in any
event no less frequently than monthly) of not less than Three Hundred
Twenty-Five Thousand Dollars ($325,000) per annum.
(b) The Company shall pay to the Executive bonus
compensation for each fiscal year of the Company, not later than 60 days
following the end of each fiscal year or the termination of the employment, as
the case may be, prorated on a per diem basis for partial fiscal years,
determined and calculated in a manner set forth on Exhibit A attached hereto.
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(c) The Company shall provide to the Executive life,
medical, hospitalization and dental insurance for himself, his spouse and
eligible family members as may be determined by the Board to be consistent with
industry standards.
(d) The Company shall provide to the Executive a
suitable new, air-conditioned, full-sized automobile, or other automobile of
equal or lesser value of the Executive's choice, for the exclusive use of the
Executive, together with automobile theft, casualty, and liability insurance,
and payment or reimbursement of the Executive for all maintenance, repair and
gasoline or, in lieu of the foregoing automobile, an automobile allowance as
exists from time to time under Company policy, the dollar amount of which shall
be substantially commensurate with the cost for such automobile, together with
insurance costs, maintenance, repairs and gasoline for Executive's personal
vehicle used in lieu thereof.
(e) The Executive shall participate in all retirement
and other benefit plans of the Company generally available from time to time to
employees of the Company and for which the Executive qualifies under the terms
thereof (and nothing in this Agreement shall or shall be deemed to in any way
effect the Executive's right and benefits thereunder except as expressly
provided herein).
(f) The Executive shall be entitled to such periods
of vacation and sick leave allowance each year as are determined by the
Executive in his reasonable and good faith discretion, which in any event shall
be not less than as provided under the Company's vacation and sick leave policy
for executive officers.
(g) The Executive shall be entitled to participate in
any equity or other employee benefit plan that is generally available to senior
executive officers, as distinguished from general management, of the Company.
The Executive's participation in and benefits under any such plan shall be on
the terms and subject to the conditions specified in the governing document of
the particular plan.
(h) The Company shall, on the Executive's behalf,
bear the cost of initiation and regular membership fees, assessments and dues,
incurred during the term of this Employment Agreement, for one (1) golf club and
one (1) downtown business club, and shall reimburse the Executive the amount of
any charges actually and reasonably incurred at such clubs in the conduct of the
Company's business.
(i) Beginning on the day after the cessation of the
Executive's employment with the Company, except in the case of termination of
the Executive's employment for cause under Paragraph 5, and continuing until the
earlier of (A) the Executive's death, (B) the date, if ever, on which the
Executive begins full time employment with another employer or (C) the fifth
anniversary of the date of such cessation of employment, the Company shall
provide to the Executive at no cost to the Executive office space at a location
(other than the executive offices of the Company) suitable to the Executive's
status as the former Chief Investment Officer of the Company, a full-time
secretary and other customary office support functions.
(j) The Company shall reimburse the Executive or
provide him with an expense allowance during the term of this Employment
Agreement for travel, entertainment and other expenses reasonably and
necessarily incurred by the Executive in connection with the Company's business.
The Executive shall furnish such documentation with respect to reimbursement to
be paid hereunder as the Company shall reasonably request.
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(k) The Company shall reimburse the Executive or
provide him with an expense allowance during the term of this Employment
Agreement of up to $10,000 per annum for financial planning, tax return and
financial statement preparation services.
4. PAYMENT IN THE EVENT OF DEATH OR PERMANENT DISABILITY.
(a) In the event of the Executive's death or
"permanent disability" (as hereinafter defined) during the term of this
Employment Agreement, the Company shall pay to the Executive (or his successors
and assigns in the event of his death) an amount equal to two (2) times the
Executive's then effective per annum rate of salary, as determined under
Paragraph 3(a), plus a pro rata portion of the bonus applicable to the fiscal
year in which such death or permanent disability occurs, as such bonus is
determined under Paragraph 3(b).
(b) The pro rata portion of the bonus described in
Paragraph 4(a) shall be paid when and as provided in Paragraph 3(b). The
remainder of the benefit to be paid pursuant to Paragraph 4(a) shall be paid
within ninety (90) days after the date of death or permanent disability, as the
case may be.
(c) Except as otherwise provided in Paragraphs 3(e),
3(i) (in the event of permanent disability only) and 4(a), in the event of the
Executive's death or permanent disability the Executive's employment hereunder
shall terminate and the Executive shall be entitled to no further compensation
or other benefits under this Employment Agreement, except as to that portion of
any unpaid salary and other benefits accrued and earned by him hereunder up to
and including the date of such death or permanent disability, as the case may
be.
(d) For purposes of this Employment Agreement, the
Executive's "permanent disability" shall be deemed to have occurred after one
hundred twenty (120) days in the aggregate during any consecutive twelve (12)
month period, or after ninety (90) consecutive days, during which one hundred
twenty (120) or ninety (90) days, as the case may be, the Executive, by reason
of his physical or mental disability or illness, shall have been unable to
discharge his duties under this Employment Agreement. The date of permanent
disability shall be such one hundred twentieth (120th) or ninetieth (90th) day,
as the case may be. In the event either the Company or the Executive, after
receipt of notice of the Executive's permanent disability from the other,
dispute that the Executive's permanent disability shall have occurred, the
Executive shall promptly submit to a physical examination by the chief of
medicine of any major accredited hospital in the Cleveland, Ohio, area and,
unless such physician shall issue his written statement to the effect that in
his opinion, based on his diagnosis, the Executive is capable of resuming his
employment and devoting his full time and energy to discharging his duties
within thirty (30) days after the date of such statement, such permanent
disability shall be deemed to have occurred.
5. TERMINATION.
(a) The employment of the Executive under this
Employment Agreement, and the term hereof, may be terminated by the Company:
(i) on the death or permanent disability (as
defined below) of the Executive, or
(ii) for cause at any time by action of the
Board. For purposes hereof, the term "cause" shall mean:
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(A) The Executive's fraud,
commission of a felony or of an act or series of acts
which result in material injury to the business
reputation of the Company, commission of an act or
series of repeated acts of dishonesty which are
materially inimical to the best interests of the
Company, or the Executive's willful and repeated
failure to perform his duties under this Employment
Agreement, which failure has not been cured within
fifteen (15) days after the Company gives notice
thereof to the Executive; or
(B) The Executive's material breach
of any material provision of this Employment
Agreement, which breach has not been cured in all
substantial respects within ten (10) days after the
Company gives notice thereof to the Executive.
The exercise by the Company of its rights of termination under this Paragraph 5
shall be the Company's sole remedy in the event of the occurrence of the event
as a result of which such right to terminate arises. Upon any termination of
this Employment Agreement, the Executive shall be deemed to have resigned from
all offices and directorships held by the Executive in the Company.
(b) In the event of a termination claimed by the
Company to be for "cause" pursuant to Paragraph 5(a)(ii), the Executive shall
have the right to have the justification for said termination determined by
arbitration in Cleveland, Ohio. In order to exercise such right, the Executive
shall serve on the Company within thirty (30) days after termination a written
request for arbitration. The Company immediately shall request the appointment
of an arbitrator by the American Arbitration Association and thereafter the
question of "cause" shall be determined under the rules of the American
Arbitration Association, and the decision of the arbitrator shall be final and
binding on both parties. The parties shall use all reasonable efforts to
facilitate and expedite the arbitration and shall act to cause the arbitration
to be completed as promptly as possible. During the pendency of the arbitration,
the Executive shall continue to receive all compensation and benefits to which
he is entitled hereunder, and if at any time during the pendency of such
arbitration the Company fails to pay and provide all compensation and benefits
to the Executive in a timely manner the Company shall be deemed to have
automatically waived whatever rights it then may have had to terminate the
Executive's employment for cause. Expenses of the arbitration shall be borne
equally by the parties.
(c) In the event of termination for any of the
reasons set forth in subparagraph (a) of this Paragraph 5, except as otherwise
provided in Paragraphs 3(e), 3(i) (in the case of permanent disability only) and
4(a), the Executive shall be entitled to no further compensation or other
benefits under this Employment Agreement, except as to that portion of any
unpaid salary and other benefits accrued and earned by him hereunder up to and
including the effective date of such termination.
(d) If there shall occur a "Change in Control" and a
"Triggering Event" (as those terms are defined in the Change in Control
Agreement, dated April 2, 1999, between the Company and the Executive (the
"Change in Control Agreement")), then the Company or the Executive shall have
the right to terminate the employment of the Executive with the Company and, in
the event of such termination, the payments to be made to the Executive in
connection therewith shall be governed by the Change of Control Agreement and
the Executive shall be entitled to no further compensation or other benefits
under this Employment Agreement, except as to that portion of any unpaid salary
and other benefits accrued and earned by him hereunder up to and including the
effective date of such termination.
6. COVENANTS AND CONFIDENTIAL INFORMATION.
(a) The Executive acknowledges the Company's reliance
and expectation of the Executive's continued commitment to performance of his
duties and responsibilities during the term
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of this Employment Agreement. In light of such reliance and expectation on the
part of the Company, during the term of this Employment Agreement and for a
period of two (2) years thereafter (and, as to clause (ii) of this subparagraph
(a), at any time during and after the term of this Employment Agreement), the
Executive shall not, directly or indirectly, do or suffer either of the
following:
(i) Own, manage, control or participate in
the ownership, management, or control of, or be employed or
engaged by or otherwise affiliated or associated as a
consultant, independent contractor or otherwise with, any
other corporation, partnership, proprietorship, firm,
association or other business entity engaged in the business
of, or otherwise engage in the business of, acquiring, owning,
developing or managing commercial shopping centers; provided,
however, that the ownership of not more than one percent (1%)
of any class of publicly traded securities of any entity shall
not be deemed a violation of this covenant; or
(ii) Disclose, divulge, discuss, copy or
otherwise use or suffer to be used in any manner, in
competition with, or contrary to the interests of, the
Company, any confidential information relating to the
Company's operations, properties or otherwise to its
particular business or other trade secrets of the Company, it
being acknowledged by the Executive that all such information
regarding the business of the Company compiled or obtained by,
or furnished to, the Executive while the Executive shall have
been employed by or associated with the Company is
confidential information and the Company's exclusive property;
provided, however, that the foregoing restrictions shall not
apply to the extent that such information. (A) is clearly
obtainable in the public domain, (B) becomes obtainable in the
public domain, except by reason of the breach by the Executive
of the terms hereof, (C) was not acquired by the Executive in
connection with his employment or affiliation with the
Company, (D) was not acquired by the Executive from the
Company or its representatives, or (E) is required to be
disclosed by rule of law or by order of a court or
governmental body or agency.
(b) The Executive agrees and understands that the
remedy at law for any breach by him of this Paragraph 6 will be inadequate and
that the damages flowing from such breach are not readily susceptible to being
measured in monetary terms. Accordingly, it is acknowledged that, upon adequate
proof of the Executive's violation of any legally enforceable provision of this
Paragraph 6, the Company shall be entitled to immediate injunctive relief and
may obtain a temporary order restraining any threatened or further breach.
Nothing in this Paragraph 6 shall be deemed to limit the Company's remedies at
law or in equity for any breach by the Executive of any of the provisions of
this Paragraph 6 which may be pursued or availed of by the Company.
(c) The Executive has carefully considered the nature
and extent of the restrictions upon him and the rights and remedies conferred
upon the Company under this Paragraph 6, and hereby acknowledges and agrees that
the same are reasonable in time and territory, are designed to eliminate
competition which otherwise would be unfair to the Company, do not stifle the
inherent skill and experience of the Executive, would not operate as a bar to
the Executive's sole means of support, are fully required to protect the
legitimate interests of the Company and do not confer a benefit upon the Company
disproportionate to the detriment to the Executive.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio, and
has all requisite corporate power and authority to enter into, execute and
deliver this Employment Agreement, fulfill its obligations hereunder and
consummate the transactions contemplated hereby.
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(b) The execution and delivery of, performance of
obligations under, and consummation of the transactions contemplated by, this
Employment Agreement have been duly authorized and approved by all requisite
corporate action by or in respect of the Company, and this Employment Agreement
constitutes the legally valid and binding obligation of the Company, enforceable
by the Executive in accordance with its terms.
(c) No provision of the Company's governing documents
or any agreement to which its is a party or by which it is bound or of any
material law or regulation of the kind usually applicable and binding upon the
Company prohibits or limits its ability to enter into, execute and deliver this
Employment Agreement, fulfill its respective obligations hereunder and
consummate the transactions contemplated hereby.
8. MISCELLANEOUS.
(a) The Executive represents and warrants that he is
not a party to any agreement, contract or understanding, whether employment or
otherwise, which would restrict or prohibit him from undertaking or performing
employment in accordance with the terms and conditions of this Employment
Agreement.
(b) The provisions of this Employment Agreement are
severable and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision to the extent enforceable in any jurisdiction
nevertheless shall be binding and enforceable.
(c) The rights and obligations of the Company under
this Employment Agreement shall inure to the benefit of, and shall be binding
on, the Company and its successors and assigns, and the rights and obligations
(other than obligations to perform services) of the Executive under this
Employment Agreement shall inure to the benefit of, and shall be binding upon,
the Executive and his heirs, personal representatives and assigns.
(d) Any controversy or claim arising out of or
relating to this Employment Agreement, or the breach thereof, shall be settled
by arbitration in accordance with the Rules of the American Arbitration
Association then pertaining in the City of Cleveland, Ohio, and judgment upon
the award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. The arbitrator or arbitrators shall be deemed to
possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration; provided, however, that nothing in this
Paragraph 8(d) shall be construed so as to deny the Company the right and power
to seek and obtain injunctive relief in a court of equity for any breach or
threatened breach by the Executive of any of his covenants contained in
Paragraph 8 hereof.
(e) Any notice to be given under this Employment
Agreement shall be personally delivered in writing or shall have been deemed
duly given when received after it is posted in the United States mail, postage
prepaid, registered or certified, return receipt requested, and if mailed to the
Company, shall be addressed to its principal place of business, attention:
General Counsel, and if mailed to the Executive, shall be addressed to him at
his home address last known on the records of the Company, or at such other
address or addresses as either the Company or the Executive may hereafter
designate in writing to the other.
(f) The failure of either party to enforce any
provision or provisions of this Employment Agreement shall not in any way be
construed as a waiver of any such provision or provisions as to any future
violations thereof, nor prevent that party thereafter from enforcing each and
every other provision of this Employment Agreement. The rights granted the
parties herein are
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cumulative and the waiver of any single remedy shall not constitute a waiver of
such party's right to assert all other legal remedies available to it under the
circumstances.
(g) This Employment Agreement supersedes all prior
agreements and understandings between the parties and may not be modified or
terminated orally. No modification, termination or attempted waiver shall be
valid unless in writing and signed by the party against whom the same is sought
to be enforced.
(h) This Employment Agreement shall be governed by
and construed according to the laws of the State of Ohio.
(i) Captions and paragraph headings used herein are
for convenience and are not a part of this Employment Agreement and shall not be
used in construing it.
(j) Where necessary or appropriate to the meaning
hereof, the singular and plural shall be deemed to include each other, and the
masculine, feminine and neuter shall be deemed to include each other.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement on the day and year first set forth above.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation
/s/ Xxxxx X. Xxxxxxxx
By_____________________________________________
Xxxxx X. Xxxxxxxx, Chief Executive Officer
/s/ Xxxxx X. Xxxxxx
_____________________________________________
XXXXX X. XXXXXX
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EXHIBIT A
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I. INCENTIVE OPPORTUNITY
BONUS AS
% OF SALARY
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THRESHOLD TARGET MAXIMUM
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25% 50% 100%
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