SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
The EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 11, 2000, by
and between Prime Retail, Inc., a Maryland corporation ("Prime"), and the sole
general partner of Prime Retail, L.P., a Delaware limited partnership (the
"Operating Partnership"), and Xxxxxx X. Xxxxxxx (the "Executive"), as amended by
the first Amendment thereto, effective April 2, 2001, is further amended by this
Second Amendment, effective June 6, 2002 (unless otherwise noted herein) in the
following respects:
1. Section 1 of the Agreement is hereby deleted in its entirety and
replaced with the following:
1. Duties.
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During the Term hereof (as defined in Section 2 hereof), the
Company agrees to retain Executive, and Executive agrees to be
retained by the Company, as the President, Chief Financial
Officer and Treasurer of the Company on the terms and
conditions provided in this Agreement. Executive shall serve
in such positions and Executive shall exercise such powers and
authority as are customarily inherent in similar positions in
a comparable publicly-held entity or as provided by the
By-laws of Prime ("By-laws") and the Agreement of Limited
Partnership of the Operating Partnership, as amended (the
"Partnership Agreement"). Prime, in its capacity as sole
general partner of the Operating Partnership, may, from time
to time, in its sole discretion, by action of its Board of
Directors (the "Board") further define and clarify Executive's
duties and services hereunder or under the By-laws or
Partnership Agreement in a manner consistent with the offices
for which he has been retained hereunder and the scope of work
set forth herein. Executive agrees to devote his best efforts
and substantially all of his business time, attention, energy,
and skill to performing his duties to the Company under this
Agreement. Executive will report directly and exclusively to
the Company's Chief Executive Officer ("CEO"), and he will
perform all of his duties in accordance with such reasonable
directions, requests, rules and regulations as are specified
by the CEO in connection with his employment. During the Term
of this Agreement, it shall not be a violation of this
Agreement for Executive to (i) serve on corporate,
industry-related, civic, or charitable boards or committees or
devote time to serving any such entities or organizations,
(ii) deliver lectures, fulfill speaking engagements, or teach
at educational institutions, or (iii) manage personal
investments and finances and business and legal affairs, to
the extent that such activities do not violate this Section 1
or Section 5 hereof.
2. Section 2 of the Agreement is hereby deleted in its entirety and
replaced with the following:
2. Term.
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The term of this Agreement, unless earlier terminated in
accordance with the terms of this Agreement, will extend to
June 6, 2005 (the "Original Term"); provided, however, that if
this Agreement is not affirmatively terminated by either
party, or extended or renewed for a specific duration in
writing by agreement of the parties, prior to the last day of
the Original Term, this Agreement will continue on a
month-to-month basis thereafter (the "Extended Term"). The
parties agree to cooperate and discuss in good faith their
intentions with regard to this Agreement's extension or
renewal 12 months prior to the end of the Original Term.
Notwithstanding the foregoing, the Company agrees to provide
Executive with a minimum of six months' advance written notice
of its intent to terminate this Agreement during the Original
Term or the Extended Term for any reason other than Cause, in
which case the Company shall comply with the notice
requirements of Sections 4(a)(2) and (3) hereof, and Executive
agrees to provide the Company with a minimum of 60 days'
advance written notice of his intent to terminate this
Agreement during the Original Term or the Extended Term for
any reason other than Good Reason, in which case Executive
shall comply with the notice requirements of Section
4(b)(1)(E) hereof. The Original Term and any Extended Term of
this Agreement shall end only following termination by written
notice by the Company or Executive in accordance with this
Section. For purposes of this Agreement, the terms "Original
Term" and "Extended Term" shall herein be collectively
referred to as the "Term."
3. Section 3(a) of the Agreement is hereby deleted in its entirety and
replaced with the following:
(a) Base Salary. For the period beginning January 1, 2002 and
extending throughout the Term of this Agreement, the Operating
Partnership agrees to pay to Executive a base salary in an
aggregate amount of Four Hundred Thousand Dollars ($400,000)
per calendar year, payable in accordance with the general
policies and procedures for payment of salaries to any other
executive personnel of the Company but in all events payable
no less frequently than monthly. The then applicable amount of
yearly base salary payable to Executive pursuant to the
provisions of this Section 3(a) shall herein be referred to as
the "Base Salary." The Base Salary payable to Executive
pursuant to the provisions of this Section 3(a) shall be
subject to periodic review by the Compensation Committee of
the Board of Directors of Prime (the "Committee") based upon
periodic review of Executive's performance conducted on at
least an annual basis and may be periodically increased as a
result thereof; provided, however, that the Base Salary
payable to Executive pursuant to the provisions of this
Section 3(a) shall in no event be less than the aggregate
amount set forth in the first sentence of this paragraph. In
no event may Executive's Base Salary be reduced during the
Term without his express written consent.
4. The last sentence of Section 3(b), "Performance Bonus," is hereby
deleted in its entirety and replaced with the following:
Any amount of Performance Bonus required to be paid to
Executive for a calendar year during the Term of this
Agreement shall be paid by the Company to Executive on the
earlier of (x) the pay period of the Company following
finalization of the audit for such calendar year and final
review and approval of the bonus calculation by the Committee
or (y) February 28 (or the next business day) of the year
immediately following the end of the calendar year for which
such Performance Bonus is attributable.
5. The following paragraph shall be added at the end of Section 3(g),
"Stock Options":
As additional consideration for Executive's employment
hereunder, as of June 6, 2002 (the "Date of Grant"), Prime
granted Executive an option (the "Option") to purchase 500,000
shares of Prime's common stock, par value $0.01 per share (the
"Common Stock"). The purchase price per share was $0.11 (the
"Exercise Price"). The Option is subject to the terms and
conditions contained in the Stock Award Agreement entered into
between Prime and Executive, which terms include: (i) the
Option will have a term of ten years measured from the date of
grant; (ii) the greatest portion of the Option shares
allowable will be issued as incentive stock options (as
determined on a prorated basis for all recipients of option
awards on June 6, 2002); (iii) the Option shares will vest and
become exercisable as follows: 1/3 will vest upon the first
anniversary of the Date of Grant, 1/3 will vest upon the
second anniversary of the Date of Grant, and 1/3 will vest
upon the third anniversary of the Date of Grant, assuming
Executive's employment with Prime continues through s uch
dates; (iv) the Option will remain exercisable for 30 days
following termination of Executive for Cause, and in the event
of Executive's termination of employment for any other reason
the Option will remain exercisable for 90 days; and (v) upon
Executive's resignation for Good Reason or termination without
Cause (each as herein defined and without regard to whether a
Change of Control has occurred) during the Term of this
Agreement, the entire Option, in addition to all other
outstanding options awarded by Prime to Executive, will become
fully vested and exercisable, to the extent not previously
exercised. Prime will take all steps necessary to ensure that
all options held by Executive survive any Change of Control.
6. Subparagraph 4(d)(2) of the Agreement is hereby deleted in its entirety
and replaced with the following:
(2) a termination payment in an amount equal to two times the
One-Year Pay Equivalent, which amount shall be payable within
thirty (30) days of the effective date of termination;
7. The following sentence is hereby added at the end of Section 4(d),
"Termination Following a Change of Control":
The termination benefits pursuant to subsections (a) to (d) of
this Section 4 are mutually exclusive, and Executive shall not
be entitled to seek termination benefits under more than one
such subsection (other than as described in the last paragraph
of Section 4(a)(1)).
8. This Amendment may be executed in one or more counterparts which taken
together shall constitute one and the same instrument.
EXECUTIVE:
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Xxxxxx X. Xxxxxxx
PRIME RETAIL, INC., a Maryland corporation PRIME RETAIL, L.P., a Delaware
limited partnership
By:___________________________ By: Prime Retail, Inc.
Name:_________________________ Its: Sole General Partner
Title:________________________ By:____________________________
Name:__________________________
Title:_________________________
