Exhibit 10.40
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of October, 2003, by and among Cedar
Shopping Centers, Inc., a Maryland corporation (the "Corporation"), Cedar
Shopping Centers Partnership, L.P., a Delaware limited partnership (the
"Partnership"), and Xxxxxx X. Xxxxxx (the "Executive").
1. Position and Responsibilities.
1.1 The Executive shall serve in an executive capacity as Vice
President of both the Corporation and the Partnership with duties consistent
therewith and shall perform such other functions and undertake such other
responsibilities as are customarily associated with such capacity. The Executive
shall also hold such directorships and officerships in the Corporation, the
Partnership and any of their subsidiaries to which, from time to time, the
Executive may be elected or appointed during the term of this Agreement.
1.2 The Executive shall devote Executive's full business time and
skill to the business and affairs of the Corporation and the Partnership and to
the promotion of their interests.
2. Term of Employment.
2.1 The term of employment shall be four years, commencing with the
date hereof, unless sooner terminated as provided in this Agreement.
2.2 Notwithstanding the provisions of Section 2.1 hereof, each of
the Corporation and the Partnership shall have the right, on written notice to
the Executive, to terminate the Executive's employment for Cause (as defined in
Section 2.3), such termination to be effective as of the date on which notice is
given or as of such later date otherwise
specified in the notice and, upon such termination of employment for Cause,
Executive shall not be entitled to receive any additional compensation
hereunder. The Executive shall have the right, on written notice to the
Corporation and the Partnership, to terminate the Executive's employment for
Good Reason (as defined in Section 2.4), such termination to be effective as of
the date on which notice is given or as of such later date otherwise specified
in the notice; provided, however, the Executive's right to terminate Executive's
employment shall lapse 60 days after the occurrence of any of the events
specified in clauses (iii) or (iv) of the definition of Good Reason.
2.3 For purposes of this Agreement, the term "Cause" shall mean any
of the following actions by the Executive: (a) failure to comply with any of the
material terms of this Agreement, which shall not be cured within 10 days after
written notice, or if the same is not of a nature that it can be completely
cured within such 10 day period, if Executive shall have failed to commence to
cure the same within such 10 day period and shall have failed to pursue the cure
of the same diligently thereafter; (b) engagement in gross misconduct injurious
to the business or reputation of the Corporation or the Partnership; (c) knowing
and willful neglect or refusal to attend to the material duties assigned to the
Executive by the Board of Directors of the Corporation, which shall not be cured
within 10 days after written notice; (d) intentional misappropriation of
property of the Corporation or the Partnership to the Executive's own use; (e)
the commission by the Executive of an act of fraud or embezzlement; (f)
Executive's conviction for a felony; (g) Executive's engaging in any activity
which is prohibited pursuant to Section 5 of this Agreement, which shall not be
cured within 10 days after written notice.
2.4 For purposes of this Agreement, the term "Good Reason" shall
mean any of the following: (i) a material breach of this Agreement by the
Corporation or the Partnership
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which shall not be cured within 10 days after written notice; (ii) a material
reduction in the Executive's duties or responsibilities; (iii) the relocation of
the Executive's office or the Corporation's or Partnership's executive offices
to a location more than 30 miles from New York City; or (iv) a "Change in
Control", as defined below. As used herein, a "Change in Control" shall be
deemed to occur if: (i) there shall be consummated (x) any consolidation or
merger of the Corporation or the Partnership in which the Corporation or the
Partnership is not the continuing or surviving corporation or pursuant to which
the stock of the Corporation or the units of the Partnership would be converted
into cash, securities or other property, other than a merger or consolidation of
the Corporation or Partnership in which the holders of the Corporation's stock
immediately prior to the merger or consolidation hold more than fifty percent
(50%) of the stock or other forms of equity of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer
(in one transaction or series of related transactions) of all, or substantially
all, the assets of the Corporation or the Partnership; (ii) the Board approves
any plan or proposal for liquidation or dissolution of the Corporation or the
Partnership; or (iii) any person, other than Cedar Bay Company or an affiliated
entity, acquires more than 29% of the issued and outstanding common stock of the
Corporation.
3. Compensation.
3.1 The Partnership shall pay to the Executive for the services to
be rendered by the Executive hereunder to the Corporation and the Partnership a
base salary at the rate of $200,000 per annum. The base salary shall be payable
in accordance with the Corporation's or Partnership's normal payroll practices,
but not less frequently than twice a month. Such base salary will be reviewed at
least annually and may be increased (but not decreased) by the Board
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of Directors of the Corporation in its sole discretion. The Board of Directors
of the Corporation in its sole discretion may grant to the Executive a bonus to
be paid by the Corporation or Partnership, at any time and from time to time.
3.2 The Executive shall be entitled to participate in, and receive
benefits from, on the basis comparable to other senior executives, any
insurance, medical, disability, or other employee benefit plan of the
Corporation, the Partnership or any of their subsidiaries which may be in effect
at any time during the course of Executive's employment by the Corporation and
the Partnership and which shall be generally available to senior executives of
the Corporation, the Partnership or any of their subsidiaries.
3.3 The Partnership agrees to reimburse the Executive for all
reasonable and necessary business expenses incurred by the Executive on behalf
of the Corporation or the Partnership in the course of Executive's duties
hereunder upon the presentation by the Executive of appropriate vouchers
therefor, including continuing legal education, professional licenses and
organizations and conferences approved by the CEO.
3.4 The Executive shall be entitled each year of this Agreement to
paid vacation in accordance with the Corporation's or Partnership's policies but
not less than 4 weeks plus personal and floating holidays (and a ratable number
of sick days), which if not taken during such year will be forfeited (unless
management requests postponement).
3.5 In recognition of Executive's need for an automobile for
business purposes, the Corporation or the Partnership will reimburse the
Executive for Executive's use of an automobile, including lease payments, if
any, and all related costs, including maintenance, gasoline and insurance;
provided, however, that such amount shall not exceed $450.00 a month. Insurance,
maintenance and gas for business use is additional.
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3.6 If, during the period of employment hereunder, because of
illness or other incapacity, the Executive shall fail for a period of 90
consecutive days, or for shorter periods aggregating more than six months during
the term of this Agreement, to render the services contemplated hereunder, then
the Corporation or the Partnership, at either of their options, may terminate
the term of employment hereunder by notice from the Corporation or the
Partnership, as the case may be, to the Executive, effective on the giving of
such notice. During any period of disability of Executive during the term
hereof, the Corporation shall continue to pay to Executive the salary and bonus
to which the Executive is entitled pursuant to Section 3.1 hereof.
3.7 In the event of the death of the Executive during the term
hereof, the employment hereunder shall terminate on the date of death of the
Executive.
3.8 Each of the Corporation and the Partnership shall have the right
to obtain for their respective benefits an appropriate life insurance policy on
the life of the Executive, naming the Corporation or the Partnership as the
beneficiary. If requested by the Corporation or the Partnership, the Executive
agrees to cooperate with the Corporation or the Partnership, as the case may be,
in obtaining such policy.
4. Severance Compensation Upon Termination of Employment.
4.1 If the Executive's employment with the Corporation or the
Partnership shall be terminated (a) by the Corporation or Partnership other than
for Cause or pursuant to Sections 3.6 or 3.7, or (b) by the Executive for Good
Reason, then the Corporation and the Partnership shall:
(i) pay to the Executive as severance pay, within five days
after termination, a lump sum payment equal to 250% of the sum of the
Executive's
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annual salary at the rate applicable on the date of termination and the
average of the Executive's annual bonus for the preceding two full fiscal
years; provided, however, that the average of the Executive's annual bonus
for (x) the first year of this Agreement shall be the Executive's annual
salary and (y) during the second year of this Agreement shall be the
actual annual bonus for such year. If the severance payment under this
Section 4.1, either alone or together with other payments which the
Executive has the right to receive from the Corporation would not be
deductible (in whole or in part) by the Corporation as a result of such
payment constituting a "parachute payment" (as defined in Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code")), such
severance payment shall be reduced to the largest amount as will result in
no portion of the severance payment under this Section 4.1 not being fully
deductible by the Corporation as a result of Section 280G of the Code. The
determination of any reduction in the severance payment under this Section
4.1 pursuant to the foregoing proviso shall be made exclusively by the
Corporation's independent accountants (whose fees and expenses shall be
borne by the Corporation), and such determination shall be conclusive and
binding;
(ii) arrange to provide Executive, for a 12 month period (or
such shorter period as Executive may elect), with disability, accident and
health insurance substantially similar to those insurance benefits which
Executive is receiving immediately prior to the earlier of a Change in
Control, if any, or the date of termination to the extent obtainable upon
reasonable terms; provided, however, if it is not so obtainable the
Corporation shall pay to the Executive in cash the annual amount paid by
the Corporation or the Partnership for such benefits during the previous
year of the
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Executive's employment. Benefits otherwise receivable by Executive
pursuant to this Section 4.1(ii) shall be reduced to the extent comparable
benefits are actually received by the Executive during such 12 month
period following his termination (or such shorter period elected by the
Executive), and any such benefits actually received by Executive shall be
reported by the Executive to the Corporation; and
(iii) any options granted to Executive to acquire common stock
of the Corporation which have not vested shall immediately vest on such
termination.
4.2 (a) The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor, except to the extent provided in Section 4.1
above, shall the amount of any payment provided for under this Agreement be
reduced by any compensation earned by the Executive as a result of employment by
another employer or by insurance benefits after the date of termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any benefit plan of the Corporation or
Partnership, or other contract, plan or arrangement.
5. Other Activities During Employment.
5.1 The Executive shall not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise.
Subject to compliance
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with the provisions of this Agreement, the Executive may engage in reasonable
activities with respect to personal investments of the Executive.
5.2 During the term of this Agreement, without the prior approval of
the Board of Directors, neither the Executive nor any entity in which he may be
interested as a partner, trustee, director, officer, employee, shareholder,
option holder, lender of money or guarantor, shall be engaged directly or
indirectly in any real estate development, leasing, marketing or management
activities other than through the Corporation and the Partnership, except for
activities existing on the date of this Agreement which have been disclosed to
the Corporation; provided, however, that the foregoing shall not be deemed to
(a) prohibit the Executive from being on the Board of Directors of another
entity, (b) prevent the Executive from investing in securities if such class of
securities in which the investment is so made is listed on a national securities
exchange or is issued by a company registered under Section 12(g) of the
Securities Exchange Act of 1934, so long as such investment holdings do not, in
the aggregate, constitute more than 1% of the voting stock of any company's
securities or (c) prohibit passive investments, subject to any limitations
contained in subparagraph (b) above.
5.3 The Executive shall not at any time during this Agreement or
after the termination hereof directly or indirectly divulge, furnish, use,
publish or make accessible to any person or entity any Confidential Information
(as hereinafter defined), except pursuant to subpoena, court order or applicable
law. Any records of Confidential Information prepared by the Executive or which
come into Executive's possession during this Agreement are and remain the
property of the Corporation or the Partnership, as the case may be, and upon
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termination of Executive's employment all such records and copies thereof shall
be either left with or returned to the Corporation or the Partnership, as the
case may be.
5.4 The term "Confidential Information" shall mean information
disclosed to the Executive or known, learned, created or observed by Executive
as a consequence of or through employment by the Corporation and the
Partnership, not generally known in the relevant trade or industry, about the
Corporation's or the Partnership's business activities, services and processes,
including but not limited to information concerning advertising, sales
promotion, publicity, sales data, research, copy, leasing, other printed matter,
artwork, photographs, reproductions, layout, finances, accounting, methods,
processes, business plans, contractors, lessee and supplier lists and records,
potential lessee and supplier lists, and contractor, lessee or supplier billing.
6. Post-Employment Activities.
6.1 During the term of employment hereunder, and for a period of one
year after termination of employment, regardless of the reason for such
termination other than by the Corporation or Partnership without Cause or by the
Executive for Good Reason, the Executive shall not directly or indirectly become
employed by, act as a consultant to, or otherwise render any services to any
person, corporation, partnership or other entity which is engaged in, or about
to become engaged in, the retail shopping center business or any other business
which is competitive with the business of the Corporation, the Partnership or
any of their subsidiaries nor shall Executive use Executive's talents to make
any such business competitive with the business of the Corporation, the
Partnership or any of their subsidiaries. For the purpose of this Section, a
retail shopping center business or other business shall be deemed to be
competitive if it involves the ownership, operation, leasing or management of
any retail shopping centers
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which draw from the same related trade area, which is deemed to be within a
radius of 10 miles from the location of (a) any then existing shopping centers
of the Corporation, the Partnership or any of their subsidiaries or (b) any
proposed centers for which the site is owned or under contract, is under
construction or is actively being negotiated. The Executive shall be deemed to
be directly or indirectly engaged in a business if Executive participates
therein as a director, officer, stockholder, employee, agent, consultant,
manager, salesman, partner or individual proprietor, or as an investor who has
made advances or loans, contributions to capital or expenditures for the
purchase of stock, or in any capacity or manner whatsoever; provided, however,
that the foregoing shall not be deemed to prevent the Executive from investing
in securities if such class of securities in which the investment is so made is
listed on a national securities exchange or is issued by a company registered
under Section 12(g) of the Securities Exchange Act of 1934, so long as such
investment holdings do not, in the aggregate, constitute more than 1% of the
voting stock of any company's securities.
6.2 The Executive acknowledges that Executive has been employed for
Executive's special talents and that Executive's leaving the employ of the
Corporation and the Partnership would seriously hamper the business of the
Corporation and the Partnership. The Executive agrees that the Corporation and
the Partnership shall each be entitled to injunctive relief, in addition to all
remedies permitted by law, to enforce the provisions of Sections 5 and 6 hereof.
The Executive further acknowledges that Executive's training, experience and
technical skills are of such breadth that they can be employed to advantage in
other areas which are not competitive with the present business of the
Corporation and the Partnership and consequently the foregoing obligation will
not unreasonably impair Executive's ability to engage in business activity after
the termination of Executive's present employment.
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6.3 The Executive will not, during the period of one year after
termination of employment, regardless of the reason for such termination, hire
or offer to hire or entice away or in any other manner persuade or attempt to
persuade, either in Executive's individual capacity or as agent for another, any
of the Corporation's, the Partnership's or any of their subsidiaries' officers,
employees or agents to discontinue their relationship with the Corporation, the
Partnership or any of their subsidiaries nor divert or attempt to divert from
the Corporation, the Partnership or any of their subsidiaries any business
whatsoever by influencing or attempting to influence any contractor, lessee or
supplier of the Corporation, the Partnership or any of their subsidiaries.
7. Assignment. This Agreement shall inure to the benefit of and be binding
upon the Corporation, the Partnership and their successors and assigns, and upon
the Executive and Executive's heirs, executors, administrators and legal
representatives. The Corporation and the Partnership will require any successor
or assign to all or substantially all of their business or assets to assume and
perform this Agreement in the same manner and to the same extent that the
Corporation and the Partnership would be required to perform if no such
succession or assignment had taken place. This Agreement shall not be assignable
by the Executive.
8. No Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement, except as provided in Section 7 hereof.
9. Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
10. Interpretation. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect,
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such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been contained herein.
If, moreover, any one or more of the provisions contained in this Agreement
shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, it shall be construed by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable law as it shall then appear.
11. Notices. All notices under this Agreement shall be in writing and
shall be deemed to have been given at the time when mailed by registered or
certified mail, addressed to the address below stated of the party to which
notice is given, or to such changed address as such party may have fixed by
notice:
To the Corporation
or the Partnership:
Cedar Shopping Centers, Inc.
00 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attn: President
To the Executive:
Xxxxxx X. Xxxxxx
provided, however, that any notice of change of address shall be effective only
upon receipt.
12. Waivers. If either party should waive any breach of any provision of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
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13. Complete Agreement; Amendments. The foregoing is the entire agreement
of the parties with respect to the subject matter hereof and may not be amended,
supplemented, cancelled or discharged except by written instrument executed by
both parties hereto.
14. Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of the State of New York without giving effect to
principles of conflicts of law.
15. Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all of the parties
hereto, notwithstanding that all such parties are not signatories to the same
counterpart.
16. Arbitration. Mindful of the high cost of litigation, not only in
dollars but time and energy as well, the parties intend to and do hereby
establish a quick, final and binding out-of-court dispute resolution procedure
to be followed in the unlikely event any controversy should arise out of or
concerning the performance of this Agreement. Accordingly, the parties do hereby
covenant and agree that any controversy, dispute or claim of whatever nature
arising out of, in connection with or in relation to the interpretation,
performance or breach of this Agreement, including any claim based on contract,
tort or statute, shall be settled, at the request of any party to this
Agreement, through arbitration by a dispute resolution process administered by
JAMS or any other mutually agreed upon arbitration firm involving final and
binding arbitration conducted at a location determined by the arbitrator in New
York City administered by and in accordance with the then existing rules of
practice and procedure of such arbitration firm and judgment upon any award
rendered by the arbitrator may be entered by any state or federal court having
jurisdiction thereof; provided, however, that the Corporation and the
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Partnership shall be entitled to seek judicial relief to enforce the provisions
of Sections 5 and 6 of this Agreement.
17. Indemnification. During this Agreement and thereafter, the Corporation
and the Partnership shall indemnify the Executive to the fullest extent
permitted by law against any judgments, fine, amounts paid in settlement and
reasonable expenses (including attorneys' fees) in connection with any claim,
action or proceeding (whether civil or criminal) against the Executive as a
result of the Executive serving as an officer or director of the Corporation or
the Partnership, in or with regard to any other entity, employee benefit plan or
enterprise (other than arising out of the Executive's act of willful misconduct,
gross negligence, misappropriation of funds, fraud or breach of this Agreement).
This indemnification shall be in addition to, and not in lieu of, any other
indemnification the Executive shall be entitled to pursuant to the Corporation's
or Partnership's Articles of Incorporation, By-Laws, Agreement of Limited
Partnership or otherwise. Following the Executive's termination of employment,
the Corporation and the Partnership shall continue to cover the Executive under
the then existing director's and officer's insurance, if any, for the period
during which the Executive may be subject to potential liability for any claim,
action or proceeding (whether civil or criminal) as a result of his service as
an officer or director of the Corporation or the Partnership or in any capacity
at the request of the Corporation or the Partnership, in or with regard to any
other entity, employee benefit plan or enterprise on the same terms such
coverage was provided during this Agreement, at the highest level then
maintained for any then current or former officer or director.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Cedar Shopping Centers, Inc.
By:
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Title:
Cedar Shopping Centers Partnership, L.P.
By: Cedar Shopping Centers, Inc.,
General Partner
By:
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Title:
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Xxxxxx X. Xxxxxx
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