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Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 1st day of
July, 2000, by and between INLAND REAL ESTATE CORPORATION, a Maryland
corporation (the "Company"), and XXXX X. XXXXXXXXX (the "Executive").
RECITALS:
A. The Company is a real estate investment trust which owns, operates and
acquires neighborhood retail centers and community centers within a 400 mile
radius of its headquarters in Oak Brook, Illinois (the "Business").
B. The Company, Inland Real Estate Investment Corporation, a Delaware
corporation ("IREIC"), Inland Real Estate Advisory Services, Inc., an Illinois
corporation ("IREAS"), The Inland Property Management Group, Inc., a Delaware
corporation ("TIPMG"), Inland Commercial Property Management, Inc., an Illinois
corporation ("ICPM") and The Inland Group, Inc. ("TIGI") have entered into that
certain Agreement and Plan of Merger, dated as of March 7, 2000 (the "Merger
Agreement"), pursuant to which IREAS and ICPM will each become a wholly-owned
subsidiary of the Company (the "Merger").
C. Executive as an employee of an affiliate of TIGI has obtained certain
unique and particular talents and abilities with regard to the Business.
D. The Company desires to employ Executive to assure itself of the
availability of his talents and abilities and Executive desires to be employed
by the Company, subject to the terms, conditions and covenants hereinafter set
forth.
E. The Company and the Executive desire to terminate all presently existing
employment agreements, whether written or oral, and all other agreements, if
any, regarding his employment with TIGI, IREIC, TIPMG, IREAS and ICPM or any of
their affiliates, including but not limited to those to which the Company would
have succeeded following the Merger, and intend to have this Agreement govern
instead.
F. As a condition of the Company employing Executive, Executive has agreed
to restrict his ability to enter into competition with the Company.
NOW, THEREFORE, in consideration of the foregoing and the agreements,
covenants and conditions set forth herein, the Executive and the Company hereby
agree as follows:
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ARTICLE I
EMPLOYMENT
1.1 Employment.
(a) The Company hereby employs, engages and hires Executive, and
Executive hereby accepts employment, upon the terms and conditions set
forth in this Agreement. The Executive shall serve as Chief Financial
Officer and Treasurer, with duties commensurate with such position and such
other duties and responsibilities as assigned from time to time by the
Company.
(b) In addition, the Executive shall provide advice, consultation and
services to any other entities which control, are controlled by or are
under common control with the Company now or in the future (together
"Affiliates"), as may be requested by the Company.
1.2 Activities and Duties During Employment. Executive represents and
warrants to the Company that he is free to accept employment with the Company,
and that he has no prior or other commitments or obligations of any kind to
anyone else which would hinder or interfere with his acceptance of his
obligations under this Agreement, or the exercise of his reasonable commercial
efforts as an employee of the Company. During the Employment Term (as defined
below), Executive agrees:
(a) to faithfully serve and further the interests of the Company in
every lawful way, giving honest, diligent, loyal and cooperative service to
the Company and its Affiliates;
(b) to comply with all reasonable rules and policies which are
consistent with the terms of this Agreement and which, from time to time,
may be adopted by the Company and/or its Affiliates; and
(c) to devote all of his business time, attention and efforts to the
faithful and diligent performance of his services to the Company and its
Affiliates.
ARTICLE II
TERM
2.1 Term. The term of employment under this Agreement shall commence on
the date of the Agreement and shall last for a period of one (1) year (the
"Initial Term"). Such term shall automatically be renewed for successive
one-year periods thereafter unless terminated by either party by written notice
not less than 30 days prior to the expiration of the then-current term. The term
of Executive's employment hereunder may also be terminated as provided in
Section 2.2 (the
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Initial Term, as it may be extended or terminated, is herein referred to as the
"Employment Term").
2.2 Termination. The Employment Term and employment of Executive may be
terminated as follows:
(a) By the Company immediately for Cause (as hereinafter defined).
(b) By the Company immediately without Cause.
(c) Automatically, without the action of either party, upon the death
of Executive.
(d) By either party upon a determination of Total Disability (as
hereinafter defined) of the Executive.
(e) Voluntarily by the Executive.
2.3 Definitions of "Cause" and "Total Disability".
(a) For the purpose of this Agreement, "CAUSE" shall mean (I) conduct
amounting to fraud, embezzlement, or illegal misconduct in connection with
Executive's duties under this Agreement and as an employee of the Company;
(II) conduct that the Company reasonably believes has brought the Company
into substantial public disgrace or disrepute; (III) failure to perform his
duties hereunder as reasonably directed by the Company after providing
written notice of such failure to the Executive and the Executive has
failed to cure such non-performance within ten days of receiving such
notice; (IV) gross negligence or willful misconduct with respect to the
Company, its clients, its employees and its activities; or (V) any other
material breach of this Agreement or any other agreement to which the
Executive and the Company are a party or any material breach of any written
policy adopted by the Company concerning conflicts of interest, standards
of business conduct or fair employment practices and any other similar
matter, provided that the Company has provided written notice of the breach
to the Executive and Executive has failed to cure the breach within ten
days of receiving such notice.
(b) The Executive shall be determined to have a Total Disability for
purposes of this Agreement if he is unable by reason of accident or illness
to substantially perform his employment duties, and is expected to be in
such condition for periods totaling six (6) months (whether or not
consecutive) during any period of twelve (12) months. The determination of
whether a Total Disability has occurred shall be based on the determination
of a physician mutually acceptable to the Company and the Executive.
Nothing herein shall limit the Executive's right to receive any payments to
which Executive may be entitled under any disability or employee benefit
plan of the Company or under any disability or insurance policy or plan.
During a period of Total Disability prior to
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termination hereunder, Executive shall continue to receive his full
compensation (including base salary) and benefits.
ARTICLE III
COMPENSATION AND BENEFITS
3.1 Compensation.
(a) During the Employment Term, the Company shall pay Executive such
salary and benefits as shall be agreed upon each year between Executive and
the Company. For the Initial Term, the Company shall pay Executive a base
salary of One Hundred Twenty-Five Thousand Dollars ($125,000.00) per year
(the "Base Salary"). At the expiration of the Initial Term, and again at
the expiration of each renewal of the Initial Term, the Company shall
review Executive's Base Salary to determine an appropriate Base Salary to
be effective at the beginning of the renewal of the Initial Term or any
subsequent renewal.
(b) The Company may, in addition to Executive's Base Salary, pay
Executive an annual bonus as determined by the Company. The bonus will be
determined by the Company in its sole discretion and may be based upon,
among other things, Executive's achievement of performance objectives to be
established by the Company.
3.2 Payment. All compensation shall be payable in intervals in accordance
with the general payroll payment practice of the Company; except that any
payment relating to the termination of the Executive shall be paid as a lump sum
payment within 15 days of such termination; provided, however, the Accrued Bonus
portion (if any) of any payment relating to the termination of the Executive
shall be paid within 15 days from the date the Accrued Bonus is calculated by
the Company. The compensation shall be subject to such withholdings and
deductions by the Company as are required by law.
3.3 Business Expenses.
(a) Reimbursement. The Company shall reimburse the Executive for all
ordinary and necessary business expenses incurred by him in connection with
the performance of his duties hereunder. The reimbursement of business
expenses will be governed by the policies for the Company.
(b) Accounting. The Executive shall provide the Company with an
accounting of his expenses, which accounting shall clearly reflect which
expenses were incurred for proper business purposes in accordance with the
policies adopted by the Company and/or its Affiliates, and as such are
reimbursable by the Company. The Executive shall provide the Company with
such other supporting documentation and other substantiation of
reimbursable expenses as will conform to Internal Revenue Service or other
requirements.
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All such reimbursements shall be payable by the Company to the Executive
within a reasonable time after receipt by the Company of appropriate
documentation therefor.
3.4 Other Benefits. Executive shall be entitled to participate in any
retirement, pension, profit-sharing or other similar plans of the Company which
may now or hereafter be in effect and for which executive employees of the
Company are eligible to participate. Company agrees that the benefits to be
accrued to Executive in such plans will be at least at the same level as in
effect for employees of TIGI and its affiliates at the time of the execution of
this Agreement. In the event the Employment Term is terminated by the Company
without Cause, or in the event of a "Change in Ownership" (as defined herein) of
the Company, any benefits required to be provided by the terms of any
Company-sponsored benefit plans or programs, including stock option plans, which
Executive has earned or been awarded but to which Executive has not become fully
vested at the time of such termination or Change in Ownership, shall be deemed
to be fully vested in the Executive immediately prior to the time of such
termination or Change in Ownership. "Change in Ownership" shall mean (X) the
approval by the Company's stockholders of (A) a merger or consolidation of the
Company with an unaffiliated third party where the Company is not the surviving
entity, or (B) the sale of substantially all of the assets of the Company, or
(Y) the acquisition of not less than twenty five percent (25%) of the equity
voting securities of the Company by a person, or group of persons acting in
concert, not affiliated with TIGI.
3.5 Compensation Upon Termination. If Executive's employment hereunder is
terminated in accordance with the provisions of Article II, the Company will be
obligated to provide compensation and benefits, in lieu of any severance under
any severance plan that the Company may then have in effect, and subject to
setoff for any amounts owed by the Executive to the Company or any affiliate of
the Company under any contract, agreement, advance, failure to return Company
property or loan document, to Executive as follows:
(a) Upon Termination for Death or Total Disability. If Executive's
employment hereunder is terminated by reason of his death or Total
Disability, within 15 days of the date of termination, the Company will
provide to Executive (or his estate or beneficiaries):
(i) any Base Salary that has been accrued but not paid as of the
date of termination (the "Accrued Base Salary");
(ii) an amount equal to the Base Salary Executive would have
earned for the remaining portion of the then-current Employment Term
as if the termination had not occurred plus an additional six months
at the then-current level of Base Salary (the "Severance Salary");
(iii) any compensation for unused vacation days accrued as of the
termination date in an amount equal to his Base Salary multiplied by a
fraction, the numerator of which is the number of accrued unused
vacation days and the denominator of which is 360 (the "Accrued
Vacation Payment");
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(iv) reimbursement for expenses incurred by him prior to the date
of termination that are subject to reimbursement pursuant to this
Agreement (the "Accrued Reimbursable Expenses");
(v) any accrued and vested benefits required to be provided by
the terms of any company-sponsored benefit plans or programs (the
"Accrued Benefits"), together with any benefits required to be paid or
provided in the event of Executive's death or Total Disability under
applicable law; and
(vi) the pro-rated portion of any bonus that has accrued but not
been paid as of the date of termination (the "Accrued Bonus").
(b) Upon Termination by Company for Cause or by Executive. If
Executive's employment is terminated by the Company for Cause or if
Executive voluntarily terminates his employment with the Company, within 15
days of the date of termination, the Company will:
(i) pay Executive the Accrued Base Salary;
(ii) pay Executive the Accrued Vacation Payment;
(iii) pay Executive the Accrued Reimbursable Expenses;
(iv) pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law; and
(v) pay Executive the Accrued Bonus.
(c) Upon Termination by the Company Without Cause. If Executive's
employment is terminated by the Company without Cause, the Company will:
(i) pay Executive the Accrued Base Salary;
(ii) pay Executive the Severance Salary;
(iii) pay Executive the Accrued Vacation Payment;
(iv) pay Executive the Accrued Reimbursable Expenses;
(v) pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law; and
(vi) pay Executive the Accrued Bonus.
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3.6 Expiration of Term. Upon the expiration of the Employment Term because
either the Company or the Executive elects not to extend the Employment Term,
the Executive shall be entitled to receive his Accrued Base Salary, Accrued
Vacation Payment, Accrued Reimbursable Expenses, Accrued Benefits and Accrued
Bonus. Additionally, provided that within 60 days after the expiration of the
Employment Term (unless waived by the Company in its sole discretion) (the
"Waiting Period") the Executive does not become an employee of TIGI or any
affiliate of TIGI, then as soon as practicable, but in no case later than 15
days following the end of the Waiting Period, the Company shall pay to the
Executive Severance Salary calculated as if the Executive's employment was
terminated without cause immediately prior to the expiration of the Employment
Term.
3.7 Cessation of Rights and Obligations: Survival of Certain Provisions.
On the date of expiration or earlier termination of the Employment Term for any
reason, all of the respective rights, duties, obligations and covenants of the
parties, as set forth herein, shall, except as specifically provided herein to
the contrary, cease and become of no further force or effect as of the date of
said termination, and shall only survive as expressly provided for herein.
ARTICLE IV
CONFIDENTIALITY AND NON-COMPETE AGREEMENT
4.1 Non-Disclosure of Confidential Information. Executive hereby
acknowledges and agrees that the duties and services to be performed by
Executive under this Agreement are special and unique and that as a result of
his employment by the Company hereunder and his former employment with TIGI,
that Executive has developed over time and will acquire, develop and use
information of a special and unique nature and value that is not generally known
to the public or to the Company's industry, including but not limited to,
certain records, secrets, documentation, software programs, price lists, ledgers
and general information, employee records, mailing lists, client lists, client
profiles, prospective customer or client lists, accounts receivable and payable
ledgers, financial and other records of the Company or its Affiliates,
information regarding its clients or principles, and other similar matters (all
such information being hereinafter referred to as "CONFIDENTIAL INFORMATION").
Executive further acknowledges and agrees that the Confidential Information is
of great value to the Company and that the restrictions and agreements contained
in this Agreement are reasonably necessary to protect the Confidential
Information and the goodwill of the Company and the Affiliates, including that
attributable to products and services sold to clients of TIGI. Accordingly,
Executive hereby agrees that:
(a) Executive will not, during the Employment Term or at any time
thereafter, directly or indirectly, except in connection with Executive's
performance of his duties under this Agreement, or as otherwise authorized
by the Company for the benefit of the Company or any Affiliate, divulge to
any person, firm, corporation, limited liability company, or organization,
other than the Company or any affiliated entity (hereinafter referred to as
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"THIRD PARTIES"), or use or cause or authorize any Third Parties to use,
the Confidential Information, except as required by law; and
(b) Upon the termination of the Employment Term for any reason
whatsoever, Executive shall deliver or cause to be delivered to the Company
any and all Confidential Information, including drawings, notebooks, keys,
data and other documents and materials belonging to the Company or its
Affiliates which is in his possession or under his control relating to the
Company or its Affiliates, regardless of the medium upon which it is
stored, and will deliver to the Company upon such termination of employment
any other property of the Company or its Affiliates which is in his
possession or under his control.
4.2 Non-Solicitation and Covenant Not to Compete.
(a) General. Executive acknowledges that the covenants set forth in
this Section 4.2 are reasonable in scope and essential to the preservation
of the business and the goodwill of the Company, and are consideration for
the amounts to be paid to the Executive hereunder. Executive also
acknowledges that the enforcement of the covenant set forth in this Section
4.2 will not preclude Executive from being gainfully employed in such
manner and to the extent as to provide a standard of living for himself,
the members of his family and the others dependent upon him of at least the
level to which he and they have become accustomed and may expect. In
addition, Executive acknowledges that the Company and its Affiliates have
obtained an advantage over their competitors as a result of the Merger that
is characterized by relationships with clients, principals and other
contacts which is reflected in the purchase price for the Merger.
(b) Covenant. Executive hereby covenants and agrees that, during the
term of his employment hereunder and during a period of six months
following the voluntary termination of his employment hereunder (which
shall not be deemed to include a termination resulting from the expiration
of the Initial Term or any subsequent renewal) or the termination of
Executive's employment hereunder for Cause (the "Covenant Period"),
Executive shall not, directly or indirectly: (i) alone, together or in
association with others, either as a principal, agent, owner, shareholder,
officer, director, partner, employee, lender, investor or in any other
capacity, engage in, have any financial interest in or be in any way
connected or affiliated with, or render advice or services to, any business
engaged in the Business or any new businesses or lines of business which
the Company may enter prior to the termination of Executive's employment
under this Agreement in the greater metropolitan area of Chicago, Illinois,
and any suburb thereof, other than as an employee of TIGI, of an affiliate
of TIGI or otherwise on behalf of the Company as an employee thereof or
such other business as may be permitted by the Company in writing, or as
set forth on Exhibit A attached to this Agreement; (ii) divert, take away,
solicit, interfere with or attempt to divert, take away, solicit, or
interfere with any present or prospective customer, except on behalf of the
Company as an employee thereof; (iii) solicit, induce, influence or attempt
to solicit, induce or influence any employee or agent of the Company to
leave his employment or engagement
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with the Company; or offer employment or engagement to or employ or engage
any such employee of the Company, or assist or attempt to assist any such
employee of the Company in seeking other employment; or (iv) in any manner
slander, libel, or by other means take action which is or intended, or
could reasonably be expected, to be detrimental to the Company or an
Affiliate or their respective employees or operations. As used in this
Section 4.2, the term "Company" shall mean the Company or an Affiliate. As
used herein, "customer" and "prospective customer" shall include: (i) any
tenant or any other person or entity with whom the Company is negotiating
for the leasing of real property from the Company or an Affiliate at the
time of the termination of Executive's employment or during the six month
period immediately prior to such termination; or (ii) any owner of real
property the purchase or sale of which is being negotiated by the Company
at the time of the termination of Executive's employment or during the six
month period immediately prior to such termination. The restrictions
imposed by subparagraph 4.2(b) hereof shall not apply to the ownership of
one percent (1%) or less of all of the outstanding securities of any entity
whose securities are listed on a national securities exchange.
4.3 Remedies.
(a) Injunctive Relief. Executive expressly acknowledges and agrees
that the business of the Company is highly competitive and that a violation
of any of the provisions of Sections 4.1 or 4.2 would cause immediate and
irreparable harm, loss and damage to the Company or an Affiliate not
adequately compensable by a monetary award. Executive further acknowledges
and agrees that the time periods and territorial areas provided for herein
are the minimum necessary to adequately protect the business of the
Company, the enjoyment of the Confidential Information and the goodwill of
the Company. Without limiting any of the other remedies available to the
Company at law or in equity, or the Company's right or ability to collect
money damages, Executive agrees that any actual or threatened violation of
any of the provisions of Sections 4.1 or 4.2 may be immediately restrained
or enjoined by any court of competent jurisdiction, and that a temporary
restraining order or emergency, preliminary or final injunction may be
issued in any court of competent jurisdiction, upon twenty-four (24) hour
notice and without bond. Notwithstanding anything to the contrary contained
in this Agreement, the provisions of this Section shall survive the
termination of the Employment Term.
(b) Enforcement. It is the desire of the parties that the provisions
of Sections 4.1 or 4.2 be enforced to the fullest extent permissible under
the laws and public policies in each jurisdiction in which enforcement
might be sought. Accordingly, if any particular portion of Sections 4.1 or
4.2 shall ever be adjudicated as invalid or unenforceable, or if the
application thereof to any party or circumstance shall be adjudicated to be
prohibited by or invalidated by such laws or public policies, such section
or sections shall be: (i) deemed amended to delete therefrom such portions
so adjudicated; or (ii) modified as determined appropriate by such a court,
such deletions or modifications to apply only with respect to the
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operation of such section or sections in the particular jurisdictions so
adjudicating on the parties and under the circumstances as to which so
adjudicated.
ARTICLE V
MISCELLANEOUS
5.1 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given, delivered and received:
(a) when delivered, if delivered personally, (b) four days after mailing, when
sent by registered or certified mail, return receipt requested and postage
prepaid, (c) one business day after delivery to a private courier service, when
delivered to a private courier service providing documented overnight service,
and (d) on the date of delivery if delivered by telecopy, receipt confirmed,
provided that a confirmation copy is sent on the next business day by first
class mail, postage prepaid, in each case addressed as follows:
To Executive at his home address.
To Company at: Inland Real Estate Corporation
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
With a copy to: Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.
5.2 Entire Agreement; Amendments, Etc. This Agreement contains the entire
agreement and understanding of the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter thereof. No
modification, amendment, waiver or alteration of this Agreement or any provision
or term hereof shall in any event be effective unless the same shall be in
writing, executed by both parties hereto, and any waiver so given shall be
effective only in the specific instance and for the specific purpose for which
given.
5.3 Benefit. This Agreement shall be binding upon, and inure to the
benefit of, and shall be enforceable by, the heirs, successors and legal
representatives of Executive and the successors,
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assignees and transferees of the Company and its current or future Affiliates.
This Agreement or any right or interest hereunder may not be assigned by
Executive.
5.4 No Waiver. No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder or pursuant hereto shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder or pursuant thereto.
5.5 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law but, if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. If any part of any
covenant or other provision in this Agreement is determined by a court of law to
be overly broad thereby making the covenant unenforceable, the parties hereto
agree, and it is their desire, that the court shall substitute a judicially
enforceable limitation in its place, and that as so modified the covenant shall
be binding upon the parties as if originally set forth herein.
5.6 Compliance and Headings. The headings in this Agreement are intended
to be for convenience and reference only, and shall not define or limit the
scope, extent or intent or otherwise affect the meaning of any portion hereof.
5.7 Governing Law. The parties agree that this Agreement shall be governed
by, interpreted and construed in accordance with the laws of the State of
Illinois, and the parties agree that any suit, action or proceeding with respect
to this Agreement shall be brought in the state courts in Chicago, Illinois or
in the U.S. District Court for the Northern District of Illinois. The parties
hereto hereby accept the exclusive jurisdiction of those courts for the purpose
of any such suit, action or proceeding. Venue for any such action, in addition
to any other venue permitted by statute, will be in Chicago, Illinois.
5.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
5.9 No Presumption Against Drafter. Each of the parties hereto has jointly
participated in the negotiation and drafting of this Agreement. In the event an
ambiguity or a question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by each of the parties hereto and no
presumptions or burdens of proof shall arise favoring any party by virtue of the
authorship of any provisions of this Agreement.
5.10 Enforcement. In the event either of the parties to this Agreement
shall bring an action against the other party with respect to the enforcement or
breach of any provision of this Agreement, the prevailing party in such action
shall recover from the non-prevailing party the costs
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incurred by the prevailing party with respect to such action including court
costs and reasonable attorneys' fees.
5.11 Recitals. The Recitals set forth above are hereby incorporated in and
made a part of this Agreement by this reference.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered as of the day and year first above written.
INLAND REAL ESTATE CORPORATION,
a Maryland corporation
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
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Its: President and Chief Executive Officer
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EXECUTIVE
/s/ Xxxx X. Xxxxxxxxx
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XXXX X. XXXXXXXXX
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