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Exhibit 10.4
Page 1 of 4
SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of May 13, 1999, by and among XXXXXXX OPERATING LIMITED
PARTNERSHIP, a Delaware limited partnership, ("BOLP"), XXXXXXX REAL ESTATE,
INC., a Maryland corporation ("Xxxxxxx"), and ______________________,
("Executive").
WHEREAS, Xxxxxxx, BOLP and/or their subsidiaries and affiliates, including
entities in which Xxxxxxx or BOLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services to the
Company upon terms and conditions upon which the Company and the Executive have
previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's contributions to the
past and future growth of the Company have been and will be substantial; and
WHEREAS, to induce the Executive to remain in the employ of the Company,
the parties hereto desire to set forth certain severance benefits which BOLP
will pay to the Executive in the event of a termination of the employment of the
Executive under certain circumstances following a Change in Control of Xxxxxxx
(as defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and shall
terminate upon the earliest of (a) the date on which BOLP and Xxxxxxx have
satisfied all of their obligations hereunder, or (b) subject to the Employee's
rights under Section 4(e) hereof, the date on which the Executive is no longer
an employee of the Company for any reason whatsoever including, without
limitation, termination without cause or (c) the date which is 12 months after
the date of a Change in Control of Xxxxxxx. Notwithstanding the termination of
this Agreement subsequent to a Change in Control of Xxxxxxx, in the event that
the Executive is an employee of the Company at the moment immediately prior to a
Change in Control of Xxxxxxx, the Executive shall be entitled to receive all
benefits described hereunder as a result of a Termination Event described in
Section 3 and the provisions hereof related thereto shall survive such
termination.
2. CHANGE IN CONTROL OF XXXXXXX. For purposes of this Agreement, a "Change
in Control of Xxxxxxx" shall be deemed to occur if:
(a) There shall have occurred a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof, whether or not Xxxxxxx is then
subject to such reporting requirement, provided, however, that there shall not
be deemed to be a Change in Control of Xxxxxxx if immediately prior to the
occurrence of what would otherwise be a Change in Control of Xxxxxxx (i) the
Executive is the other party to the transaction (a "Control of Xxxxxxx Event")
that would otherwise result in a Change in Control of Xxxxxxx or (ii) the
Executive is an Executive officer, trustee, or director or more than 5% equity
holder of the other party to a Control of Xxxxxxx Event or of any entity,
directly or indirectly, controlling such other party;
(b) Xxxxxxx xxxxxx or consolidates with, or sells all or substantially all
of its assets to, another company, corporation or other entity (each, a
"Transaction"), provided, however, that a Transaction shall not be deemed to
result in a Change in Control of Xxxxxxx if (i) immediately prior thereto the
circumstances in (a) (i) or (a) (ii) above exist, or (ii) (A) the stockholders
of Xxxxxxx, immediately before such Transaction own, directly or indirectly,
immediately following such Transaction in excess of fifty percent (50%) of the
combined voting power of the outstanding voting securities of the company or
other entity resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting securities of
Xxxxxxx immediately before such Transaction and (B) the individuals who were
members of Xxxxxxx'x Board of Directors immediately prior to the execution of
the agreement providing for such Transaction constitute at least a majority of
the members of the board of directors or the board of trustees, as the case may
be, of the Surviving Corporation, or of a company or other entity beneficially
directly or indirectly owning a majority of the outstanding voting securities of
the Surviving Corporation; or
(c) Xxxxxxx acquires assets of another company or entity or a subsidiary of
Xxxxxxx xxxxxx or consolidates with another company or entity (each, an "Other
Transaction") and (i) the stockholders of Xxxxxxx, immediately before such Other
Transaction own, directly or indirectly, immediately following such Other
Transaction 50% or less of the combined voting power of the outstanding voting
securities of the company or other entity resulting from such Other Transaction
(the "Other Surviving Corporation") in substantially the same proportion as
their ownership of the voting securities of Xxxxxxx immediately before such
Other Transaction or (ii) the individuals who were members of Xxxxxxx'x Board of
Directors immediately prior to the execution of the agreement providing for such
Other
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Exhibit 10.4
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Transaction constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the Other Surviving
Corporation, or of a company or other entity beneficially directly or indirectly
owning a majority of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be deemed to
result in a Change in Control of Xxxxxxx if immediately prior thereto the
circumstances in (a) (i) or (a) (ii) above exist.
3. TERMINATION EVENT. The Executive shall be entitled to receive
compensation from BOLP in the amount determined pursuant to the following
Section 4 if the employment of the Executive by the Company is terminated within
the 12 months following the date of the Change in Control of Xxxxxxx for any of
the following reasons (a "Termination Event"):
(a) Termination by the Company other than for cause ("cause" being defined
as (i) conduct by the Executive constituting a material act of willful
misconduct in connection with the performance of his duties, including without
limitation misappropriation of funds or property or opportunities of the Company
other than the occasional, customary and de minimus use of Company property for
personal purposes, (ii) conviction of the Executive for a felony or misdemeanor
involving moral turpitude, or (iii) continued, deliberate non-performance by the
Executive of the duties incident to his position (other than by reason of
Executive's physical or mental illness, incapacity or disability) and such
non-performance has continued for more than thirty (30) days following written
notice of such non-performance from the chief executive officer of the Company
or other officer to whom the Executive usually reports); or
(b) Termination by the Executive following either (i) the Company's
notification to the Executive of a reduction in the annual base compensation
below that in effect with respect to the calendar year immediately prior to the
year in which the Change in Control of Xxxxxxx occurs (the "Prior Year") and
failure to assure the Executive that his bonus, when added to his base
compensation for each of the calendar years in which the Change in Control of
Xxxxxxx occurs and for the following calendar year, will be at least the amount
of his Annual Compensation for the Prior Year, or (ii) the Company's
reassignment of the Executive to either (A) a location more than 50 miles from
the place of work of the Executive or (B) a position that does not have the same
or greater authority and responsibility as the position held by the Executive
immediately prior to the Change in Control of Xxxxxxx.
4. COMPENSATION UPON TERMINATION EVENT. Upon the occurrence of a
Termination Event, the Executive shall be entitled to receive the compensation
and benefits set forth below:
(a) BOLP shall pay to the Executive, not later than the date of any
Termination Event, unless otherwise agreed to in writing, a lump sum severance
payment (the "Severance Payment") equal to two times the Base Amount (as defined
below). For purposes of this Section 4(a), the Base Amount shall mean the
Executive's Annual Compensation during the Prior Year preceding the calendar
year in which the Change in Control of Xxxxxxx occurs. For purposes of
determining Annual Compensation in the preceding sentence, there shall be
included (i) all base salary and cash bonuses paid or payable to the Executive
by the Company with respect to the Prior Year and (ii) the fair market value of
any stock issued to the Executive under Xxxxxxx'x Stock Option and Incentive
Plan with respect to such Prior Year provided, however, that there shall not be
included in Annual Compensation for any year any value attributable to stock
options granted to the Executive in that year or any value attributable to stock
issued pursuant to the exercise of any stock option granted in any prior year,
and provided, further, that there shall not be included in Annual Compensation
for the calendar year 1998 any amount paid in 1998 that was a part of the
"Management Adjustment Award" with respect to 1996 or 1997 described on page 6
of Xxxxxxx'x Proxy Statement for its 1999 Annual meeting of Stockholders.
(b) Xxxxxxx and BOLP shall cause the Company to maintain in full force and
effect for the Executive's continued benefit, for a period of 12 months
following the Termination Event, all life, accident, medical and dental
insurance benefit plans and programs or arrangements in which the Executive was
entitled to participate immediately prior to the date of the Change in Control
of Xxxxxxx; provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs; and provided,
further, that in the event that the Executive becomes employed on a full-time
basis by any other employer during such period, then upon the date of such
employment the Executive shall no longer be entitled to any of the accident,
medical or dental insurance benefits described in the preceding clause. Subject
to the preceding sentence, in the event that the Executive's participation in
any such plan or program is barred, Xxxxxxx and BOLP shall arrange to cause the
Company to provide the Executive with benefits substantially similar to those
which the Executive was entitled to receive under such plans and programs.
Subject to the first sentence of this subsection, at the end of the period of
coverage, the Executive shall have the option to have assigned to him at no cost
to the Executive and with no apportionment of prepaid premiums, any assignable
insurance policy owned by the Company and relating specifically to the
Executive.
(c) All options to purchase Shares now or hereafter granted to the
Executive shall vest on the day immediately prior to the date of the Termination
Event and become fully exercisable in accordance with their terms.
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Exhibit 10.4
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(d) The Executive shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by him as the result of employment by another
employer or by retirement benefits after the date of termination, or otherwise,
except as specifically provided in this Section 4.
5. GROSS UP PAYMENT. Regardless of whether Section 4 hereof is applicable,
if, in the opinion of tax counsel selected by the Executive and reasonably
acceptable to the Company, the Executive has or will receive any compensation or
recognize any income (whether or not pursuant to this Agreement or any plan or
other arrangement of the Company which constitutes an "excess parachute payment"
within the meaning of Section 280G(b) (1) of the Internal Revenue Code of 1986,
as amended (the "Code") (or for which a tax is otherwise payable under Section
4999 of the Code), BOLP shall pay the Executive an additional amount (the "Gross
Up Payment") equal to the sum of (a) all taxes payable by the Executive under
Section 4999 of the Code with respect to all such excess parachute payments (or
otherwise), including without limitation the Gross Up Payment, plus (b) all
federal, state and local income taxes payable by Executive with respect to the
Gross Up Payment. The amounts payable pursuant to this Section 5 shall be paid
by BOLP to the Executive not later than the date of the Termination Event or as
soon thereafter as the same is calculated, but at such time or times as to
eliminate the need for the Executive to pay any such taxes or installment
thereof from funds not paid or advanced by BOLP, unless otherwise agreed to in
writing.
6. EXPENSES. BOLP shall pay or reimburse the Executive, as the case may
be, for all properly documented, reasonable legal fees and related expenses
(including the costs of experts, evidence and counsel) paid by the Executive as
a result of (a) the Executive seeking to obtain or enforce any right or benefit
provided by this Agreement, or (b) any action taken by the Company against the
Executive in enforcing its rights hereunder; provided, however, that BOLP shall
reimburse the legal fees and related expenses described in this Section 6 only
if and when a final judgment has been rendered in favor of the Executive and all
appeals related to any such action have been exhausted.
7. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained herein shall
confer upon the Executive the right to continue in the employment or service of
the Company or affect any right that the Company may have to terminate the
employment or service of the Executive at any time for any reason.
8. XXXXXXX GUARANTY. Xxxxxxx guarantees the satisfaction of all
obligations of, and the full and prompt payment of all amounts payable by, BOLP
hereunder. In addition, Xxxxxxx guarantees the satisfaction of all obligations
of the Company hereunder.
9. ARBITRATION; OTHER DISPUTES. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in Chicago, Illinois, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. Notwithstanding the above, should a dispute occur
concerning the Executive's mental or physical capacity as described in
Subsection 3(a), a doctor selected by the Executive and a doctor selected by the
Company shall be entitled to examine the Executive. If the opinion of the
Company's doctor and the Executive's doctor conflict, the Company's doctor and
the Executive's doctor shall together agree upon a third doctor, whose opinion
shall be binding.
10. LITIGATION AND REGULATORY COOPERATION. During and after the period of
employment by the Company, the Executive shall reasonably cooperate with the
Company in the defense or prosecution of any claims or actions now in existence
or which may be brought in the future against or on behalf of the Company which
relate to events or occurrences that transpired while the Executive was employed
by the Company; provided, however, that such cooperation shall not materially
and adversely affect the Executive or expose the Executive to an increased
probability of civil or criminal litigation. The Executive's cooperation in
connection with such claims or actions shall include, but not be limited to,
being available to meet with counsel to prepare for discovery or trial and to
act as a witness on behalf of the Company at mutually convenient times. During
and after the Executive's employment, the Executive also shall cooperate fully
with the Company in connection with any investigation or review of any federal,
state or local regulatory authority as any such investigation or review relates
to events or occurrences that transpired while Executive was employed by the
Company. The Company shall also provide the Executive with compensation on an
hourly basis calculated at his final base compensation rate for requested
litigation and regulatory cooperation that occurs after his termination of
employment, and reimburse the Executive for all costs and expenses incurred in
connection with his performance under this Paragraph 10, including, but not
limited to, properly documented and reasonable attorneys' fees and costs.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties and is intended to supersede all prior negotiations, understandings and
agreements with respect to the subject matter hereof. No provision of this
Agreement may be waived or changed, except by a writing signed by the party to
be charged with such waiver or change.
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Exhibit 10.4
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12. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the
benefit of, be binding upon and be enforceable by Xxxxxxx and BOLP, their
successors and assigns and the Executive, and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
13. NOTICES. All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to receive the same
shall have specified by written notice given in the manner provided for in this
Section 12. All notices shall be deemed to have been given as of the date of
personal delivery, transmittal or mailing thereof.
14. SEVERABILITY. If any provision of this Agreement is determined to be
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof. IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
XXXXXXX REAL ESTATE, INC.
By:___________________________________
XXXXXXX OPERATING LIMITED PARTNERSHIP
By: Xxxxxxx Real Estate, Inc.
Its: General Partner
By:___________________________________
______________________________________
Executive
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