Exhibit 10.10
CATELLUS DEVELOPMENT CORPORATION
Third Amended and Restated
Employment Agreement
with
Xxxxxx X. Rising
Effective as of December 24, 2001
THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIS THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement"), made and entered into effective as of December 24, 2001 (the
"Effective Date"), by and between Xxxxxx X. Rising (the "Executive") and
Catellus Development Corporation, a Delaware corporation having its principal
executive offices in San Francisco, California (the "Company");
WITNESSETH THAT:
WHEREAS, the Company and Executive are parties to that certain
Second Amended and Restated Employment Agreement (the "Prior Employment
Agreement") as of October 1, 1999 under which the Executive has served the
Company as President and Chief Executive Officer of the Company; and
WHEREAS, the Company and the Executive desire to amend and
restate the prior Employment Agreement and desire that this Agreement set forth
all of the terms and conditions of the Executive's employment by the Company.
NOW, THEREFORE, in consideration of the mutual agreements set
forth below, the Executive and the Company hereby agree as follows:
1. Performance of Services. The Executive shall be employed by
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the Company in accordance with the following:
(a) Position. Subject to the terms of this Agreement, the
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Company hereby agrees to employ the Executive as Chairman and Chief Executive
Officer of the Company during the Agreement Term (as such terms are defined
below), and the Executive hereby agrees to accept and remain in such employment
during the Agreement Term. During the Agreement Term, while the Executive is
employed by the Company, the Board shall use its best efforts to cause the
Executive to continue to be elected as a member of the Board.
(b) Commitment. At all times during the Agreement Term while
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the Executive is employed by the Company, the Executive shall devote his full
time, energies and talents to serving as Chairman and Chief Executive Officer of
the Company (and in such other capacities as he may be requested to serve the
Company from time to time as provided herein). Notwithstanding the foregoing,
the Executive may devote reasonable time to activities other than those required
under this Agreement, including the supervision of his personal investments and
activities involving professional, charitable, educational, religious and
similar types of
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organizations, speaking engagements, membership on the boards of directors of
other organizations, and similar activities, to the extent that such other
activities do not in the judgment of the Board inhibit the performance of the
Executive's duties under this Agreement, or conflict with the business of the
Company or any Subsidiary; provided, however, that the Executive shall not serve
on the board of directors of any business, or hold any other position with any
business without the consent of the Board. The Company has consented to the
Executive retaining his ownership interest in Xxxxxxx/Xxxxxx Partners Master
Investments, a California limited partnership, which holds interests in various
Xxxxxxx/Xxxxxx projects, and certain other business positions or interests, all
as described in two separate letters dated July 27, 1994 from Executive to the
Company.
(c) Authority. The Executive shall have the responsibility and
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authority for the overall conduct of the business of the Company and the
Subsidiaries, including responsibility for the management and operation of those
entities, and such additional responsibilities, powers and duties, consistent
with the foregoing, as the Board, and the respective boards of directors of each
of the Subsidiaries of which the Executive may be an officer, may from time to
time prescribe. In the performance of his duties, the Executive shall only be
required to report to the Board as a whole and, with respect to his positions as
an officer of Subsidiaries of the Company, the separate boards of directors of
each such Subsidiary. The Executive shall perform his duties faithfully and
efficiently, subject to the overall policies and directions of the Board and
such other respective boards of directors. The Company agrees that the duties
which may be assigned to the Executive shall be the usual and customary duties
of Chairman and Chief Executive Officer of the Company (and of such other
offices which he may hold from time to time as provided herein) and shall not be
inconsistent with the provisions of the charter documents of the Company or
applicable law (both as in effect from time to time). The Executive shall not,
without his consent, be assigned tasks that would be inconsistent with those of
the offices held by him at any time. The Executive shall have the corporate
authority that shall reasonably be required to enable the discharge of duties in
any of the offices that he may hold from time to time. The Executive, as
Chairman and Chief Executive Officer of the Company, shall be the senior
executive, "leader" and spokesperson for the Company, and he will use his best
efforts to work in "partnership" with the Lead Independent Director of the
Board, to the extent such office is held at any time by a person other than the
Executive.
(d) Annual Performance Review. The Board shall review the
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performance by the Executive of his responsibilities as Chairman and Chief
Executive Officer of the Company (and his performance in such other capacities
as he may serve the Company from time to time as provided herein) and as an
employee of the Company no less frequently than annually and shall communicate
the Board's assessment of such performance to the Executive by March 30 of each
year.
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(e) Relocation. In connection with his employment hereunder,
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and subject to the following provisions of this paragraph 1(e), the Executive
shall not be required, without his prior written consent, to relocate the
Company headquarters or to be based anywhere other than within 50 miles from the
site of the current headquarters of the Company.
(f) Disability. The Executive shall not be required to perform
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services under this Agreement during any period that he is Disabled (as such
term is defined below).
(g) Agreement Term. For purposes of this Agreement, the term
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"Agreement Term" means the period beginning on the Effective Date and ending on
December 31, 2006.
(h) Subsidiary. For purposes of this Agreement, the term
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"Subsidiary" means any corporation, partnership, limited liability company,
joint venture or other entity during any period in which more than a fifty
percent interest in such entity is owned, directly or indirectly, by the Company
(or a successor to the Company), except to the extent that the Company is
unable, whether by contractual restriction or otherwise, to exercise control
over any such entity.
2. Compensation. During the Agreement Term, while the Executive
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is employed by the Company, the Company shall compensate the Executive for his
services as follows:
(a) Salary. From and after (and with retroactive effect to)
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the Effective Date, the Executive shall receive, in substantially equal monthly
or more frequent installments, a base salary of a minimum of $682,500 ("Salary")
per annum, which shall be increased by 5% effective January 1, 2002 and by 5%
more on each January 1 thereafter during the term of this Agreement.
(b) Bonus. The Executive shall be entitled to receive annual
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bonuses from the Company with an annual maximum bonus opportunity of 250% of the
Executive's then Salary ("Maximum Bonus Potential"), subject to the dollar
limitation which is then applicable under the Company's 2000 Performance Award
Plan, as it may be amended from time to time (the "Performance Award Plan"),
provided, however that the Company may award a larger bonus to the Executive for
achieving extraordinary performance objectives. On or before March 30 of each
year, commencing March 30, 2002, the Board shall establish performance
objectives for each year of the Agreement Term for the determination of the
Executive's bonus awards for such year, which objectives may (i) include both
individual and corporate objectives, (ii) include both qualitative and
quantitative standards, (iii) include standards based on the Company's financial
performance (which standards may be dependent upon the relative financial
performance of the Company as compared to a peer group of companies selected
from year to year by the Board), and (iv) be based on the objectives and
standards set forth in the Company's five year strategic plan or be based on
other objectives and standards. For the calendar year ending December 31, 2001,
the Executive shall be entitled to receive an annual bonus from the Company
pursuant to the bonus plan adopted by the Board for such calendar year pursuant
to the Prior Agreement.
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(c) Stock Options.
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(i) New Stock Option Grant. On the Effective Date,
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the Company shall grant to the Executive a stock option under the Plan
covering an aggregate of 500,000 shares of Common Stock which shall (i)
have an exercise price equal to the fair market value of the underlying
Common Stock on the Effective Date, (ii) vest in two equal installments
on December 31, 2005 and December 31, 2006, respectively, subject to
accelerated vesting as provided in paragraphs 4(c) and 10(a), (iii)
terminate to the extent not exercised on or prior to the tenth
anniversary of the Effective Date, (iv) be exercisable for a period of
90 days following the termination of the Executive's employment for any
reason (but only to the extent vested as of such termination date),
provided, however, that to the extent the Executive remains employed by
the Company at least through December 31, 2006 or if the Executive's
employment is terminated under circumstances described in paragraph
3(a) (relating to the Executive's death), paragraph 3(b) (relating to
the Executive's being Disabled), paragraph 3(d) (relating to
Constructive Discharge) or paragraph 3(g) (relating to termination by
the Company without Cause), such stock option will be exercisable until
the tenth anniversary of the Effective Date regardless of the date on
which the Executive terminates his employment and (v) otherwise conform
to the requirements of the Performance Award Plan.
(ii) Covenant to Take Actions to Permit Use of
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Deferred Option Gain Method of Exercise. If the Executive so requests,
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The Company shall take any and all actions which may be necessary to
permit the Executive to exercise the stock options granted to the
Executive prior to the Effective Date using the deferred option gain
method, pursuant to which the Executive will have the right to exercise
such stock options by delivering to the Company shares of the Company's
Common Stock owned by the Executive and electing to receive the shares
issuable upon such exercise of such options at a specified date in the
future.
(d) Disability. The Executive shall receive from the Company
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disability income replacement coverage which will provide for replacement of
income, to the extent available at a commercially reasonable rate of premiums,
during any period in which the Executive is Disabled if the disability arose
during the Agreement Term and prior to the Executive's Date of Termination (as
such term is defined below). During any period while the Executive is Disabled
and is otherwise entitled to receive Salary under this Agreement, any Salary
payments to the Executive shall be reduced by the amount of any benefits paid
for the same period of time pursuant to such disability income replacement
coverage.
(e) Vacation. The Executive shall be entitled to four weeks
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paid vacation per year. The Executive shall be entitled to take such vacation at
such time or times (without regard to the accrual thereof) as he shall choose,
but for purposes of calculation of amounts payable
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pursuant to Section 4(a)(ii) hereof, such vacation entitlement shall accrue
solely in accordance with the terms of the Company's vacation policy for
executive officers generally as in effect from time to time.
(f) Benefits and Perquisites. The Executive shall be entitled
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to receive benefits to such extent as, and on terms no less favorable to the
Executive than, those benefits provided by the Company from time to time to the
Company's other senior management employees and consistent with the memorandum
(the "Benefits Memorandum") attached hereto as Exhibit A. The Executive shall
also be entitled to receive the perquisites that are set forth in the Benefits
Memorandum.
(g) Expenses. The Executive shall be authorized to incur
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reasonable expenses for entertainment, travel, meals, lodging and similar items
in the conduct of the Company's business. The Company shall reimburse the
Executive for all reasonable expenses so incurred through the expiration of the
Agreement Term.
(h) Supplemental Retirement Benefits. The Company shall
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provide the Executive with supplemental retirement benefits as set forth in
Exhibit B attached hereto.
3. Termination. The Executive's employment with the
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Company during the Agreement Term may be terminated by the Company or the
Executive without any breach of this Agreement only under the circumstances
described in the following paragraphs 3(a) through 3(i):
(a) Death. The Executive's employment hereunder will terminate
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upon his death.
(b) Disability. The Company may terminate the Executive's
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employment with the Company during any period in which the Executive is
Disabled. The Executive shall be considered "Disabled" during any period in
which (i) he has a physical or mental disability which renders him incapable,
after reasonable accommodation, of performing his duties under this Agreement;
(ii) such disability is determined by the Board to be of a long-term nature; and
(iii) the Executive is eligible for income replacement benefits under the
Company's long- term disability plan during such period of disability. In the
event of a dispute as to whether the Executive is Disabled, the Company may
refer such dispute to a licensed practicing physician of the Company's choice
for binding resolution of such dispute, and the Executive agrees to submit to
such tests and examinations as such physician shall deem appropriate.
(c) Cause. The Company may terminate the Executive's employment
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hereunder at any time for Cause. For purposes of this Agreement, the term
"Cause" shall mean:
(i) the willful and continued failure by the Executive
substantially to perform his material duties with the Company (other
than any such failure resulting from the Executive's being Disabled),
after a written demand for substantial performance of such
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duties is delivered to the Executive by the Board, which demand
identifies the manner in which the Board believes that the Executive
has not substantially performed his duties and the Executive has been
given a reasonable period of time (but in no event more than 60 days)
to correct his deficient performance; or
(ii) the engaging by the Executive in egregious misconduct
involving serious moral turpitude to such an extent that, in the
reasonable judgment of the Board, such misconduct substantially impairs
the Executive's ability effectively to perform his duties with the
Company. For purposes of this Agreement, no act, or failure to act, on
the Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive without reasonable belief that the
Executive's action or omission was in the best interest of the Company.
(d) Constructive Discharge. If the Company materially breaches
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its obligations to the Executive under this Agreement, and:
(i) the Executive provides written notice to the Company of
the occurrence of such breach, which identifies the manner in which the
Executive believes that the breach has occurred, and which is delivered
to the Company within a reasonable period 10 (but in no event more than
90 days) after the Executive has actual knowledge of the events
asserted to give rise to the breach; and
(ii) the Company fails to correct any such breach within a
reasonable period (but in no event more than 60 days) after receipt of
the notice described in paragraph (d)(i); then, for purposes of this
Agreement, the Executive shall be considered to have been dismissed by
the Company for reasons other than Cause. A material breach of this
Agreement by the Company shall include, without limitation:
(1) assigning duties to the Executive that are
inconsistent in any substantial respect with the position,
authority, or responsibilities associated with the position of
Chairman and Chief Executive Officer of the Company or, after
a Change of Control of the Company (as defined in paragraph
10(c) hereof) in which the Company is not the surviving
entity, the Executive is not permitted to serve as the chief
executive officer and a member of the board of directors of
the successor entity to the Company;
(2) assigning additional duties to the Executive that
substantially impair his ability to function as Chairman and
Chief Executive Officer of the Company;
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(3) the failure by the Company to accord to the
Executive the title, authority and responsibilities of
Chairman and Chief Executive Officer of the Company;
(4) the election to the office of Chairman of the Board
of the Company of a person other than the Executive who is a
full-time employee of the Company;
(5) the failure of the Executive to be elected a member
of the Board;
(6) a reduction by the Company in the Executive's Salary
from that provided for in Section 2(a) of this Agreement or a
reduction in the Maximum Bonus Potential provided for in
Section 2(b) hereof, provided that nothing herein shall limit
or affect the Board's authority and discretion to determine
the actual bonus award earned by the Executive based upon the
Board's evaluation of the Executive's performance during the
applicable year;
(7) a requirement for the relocation of the Executive
imposed by the Board in violation of this Agreement;
(8) the intentional failure of the Company, without the
Executive's consent, to pay to the Executive any portion of
his Salary, earned bonus or other current compensation (if
any), or to pay to the Executive any portion of any
installment of deferred compensation under any deferred
compensation program of the Company, within 10 business days
of the date such compensation is due or to issue shares of
common stock of the Company in accordance with the terms of
stock options granted to the Executive upon valid exercise
thereof;
(9) in the event that there is a successor to the
Company, the failure of the Company to obtain a satisfactory
agreement from any such successor to assume and to perform the
obligations of the Company under this Agreement; or
(10) the failure of the Company to fulfill any of its
other material obligations to the Executive under this
Agreement.
(e) Termination by Executive. The Executive may terminate
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his employment thereunder at any time by giving the Company prior
written Notice of Termination (as defined in paragraph 3(h)), which
Notice of Termination shall be effective not less than 30 days after it
is given to the Company, provided that nothing in this Agreement shall
require the Executive to specify a reason for any such termination.
However, to the extent that the procedures specified in paragraph 3(d)
are required, the procedures of this paragraph 3(e) may not be used in
lieu of the procedures required under paragraph 3(d).
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(f) Mutual Agreement. This Agreement may be terminated
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at any time by the mutual agreement of the parties. Any termination of
the Executive's employment by mutual agreement of the parties shall be
memorialized in an agreement reduced to writing and signed by the
Executive and a duly appointed officer of the Company.
(g) Termination by Company Without Cause. The Company may
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terminate the Executive's employment hereunder at any time for any
reason and without Cause, and the Company shall not be required to
specify a reason for such termination, provided that termination of the
Executive's employment by the Company shall be deemed to have occurred
under this paragraph 3(g) only if it is not for reasons described in
paragraph 3(a), 3(b), 3(c), 3(d), 3(e) or 3(f).
(h) Notice of Termination. Any termination of the
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Executive's employment by the Company or the Executive (other than a
termination pursuant to paragraph 3(a) (relating to termination by
death) or paragraph 3(f) (relating to termination by mutual agreement))
must be communicated by a written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination"
means a dated notice which (i) indicates the specific termination
provision in this Agreement relied on and (ii) sets forth in reasonable
detail the facts and circumstances, if any, claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated.
(i) Date of Termination. For purposes of this
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Agreement, the "Date of Termination" means the last day the
Executive is employed by the Company; provided, that (i) the
Executive's employment is terminated in accordance with the
foregoing provisions of this paragraph 3, and
(ii) in the event of termination for Cause as defined
in paragraph 3(c)(ii) hereof such Date of Termination shall
not be less than two business days after the Executive has
received written notice of the intention to so terminate the
Executive.
4. Rights Upon Termination. The Executive's right to
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payment and benefits under this Agreement upon or for periods after his Date of
Termination shall be determined in accordance with the following provisions of
this paragraph 4:
(a) Basic Payments to Executive Upon Termination For Any
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Reason Through the Date of Termination. If the Executive's Date of Termination
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occurs during the Agreement Term for any reason, the Company shall pay to the
Executive:
(i) The Executive's Salary for the period
through the Date of Termination.
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(ii) An amount in respect of unused vacation days
as of the Date of Termination, as determined in accordance with Company
policy as in effect from time to time.
(iii) Except in the case of termination pursuant
to paragraph 3(c) (relating to termination of the Executive for Cause)
or paragraph 3(e) (relating to the Executive's resignation), a pro rata
bonus payment, which shall be an amount equal to the product of:
(A) the bonus the Executive would have
received for the Company's fiscal year which includes his Date
of Termination (determined as though he remained in the employ
of the Company through the end of such year and that the
performance levels required for the award of a target bonus to
the Executive were met); multiplied by
(B) a fraction, the numerator of which is
the number of days in the fiscal year which includes the
Executive's Date of Termination, but excluding the days
following such Date of Termination, and the denominator of
which is 365.
(iv) Any other payments or benefits to be
provided to the Executive by the Company pursuant to any employee
benefit plans or arrangements adopted by the Company, to the extent
such amounts are due from the Company. Except as may otherwise be
expressly provided to the contrary in this Agreement, nothing in this
Agreement shall be construed as requiring the Executive to be treated
as employed by the Company for purposes of any employee benefit plan or
arrangement following the Executive's Date of Termination.
(b) No Payment Obligations to the Executive After the
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Date of Termination in Certain Circumstances. If the Executive's Date of
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Termination occurs under circumstances described in paragraph 3(c) (relating to
termination of the Executive for Cause), paragraph 3(e) (relating to the
Executive's resignation) or paragraph 3(f) (relating to termination by mutual
agreement), or if the Executive's employment with the Company terminates after
the end of the Agreement Term, then, except as otherwise expressly provided in
this Agreement or otherwise agreed in writing between the Executive and the
Company, the Company shall have no obligation to make payments under this
Agreement for periods after the Date of Termination.
(c) Payments to the Executive After Date of Termination
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in the Event of Death, Disability, Constructive Discharge or Termination Without
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Cause. If the Date of Termination occurs under circumstances described in
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paragraph 3(a) (relating to the Executive's death), paragraph 3(b) (relating to
the Executive's being Disabled), paragraph 3(d) (relating to Constructive
Discharge) or paragraph 3(g) (relating to termination by the Company without
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Cause), then, in addition to the amounts payable in accordance with paragraph
4(a), the Company shall pay the Executive, in monthly payments over a period of
24 months from the Date of Termination , a monthly amount equal to one
twenty-fourth (1/24) of the amount that is two (2) times the Executive's
"Average Salary and Bonus." For the purposes of this paragraph (c) only,
"Average Salary and Bonus" means the average of the Executive's annual salary
and annual bonus, including any amounts deferred by the Executive under the
Company's Profit Sharing and Savings Plan, Cafeteria Plan, and Executive
Deferred Compensation Plan and any other deferred compensation program now or
hereafter established by the Company, earned by the Executive for the three full
calendar years prior to termination of the Executive's employment (regardless of
whether all of such years occurred while this Agreement was in effect and
regardless of whether those earned amounts were paid out on a current basis or
deferred). In addition, the stock options held by Executive shall become fully
vested immediately upon such termination of employment and the Executive shall
be entitled to accelerated supplemental retirement benefit credits as set forth
in Exhibit B. The Company's obligation to make payments, accelerate the vesting
of Executive's stock options and retirement benefit credits under this paragraph
4(c) and Exhibit B shall cease immediately upon the breach by the Executive of
the provisions of paragraph 7 or paragraph 8.
(d) Payments in Lieu of Benefits Under Severance Agreements.
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Except as may be otherwise specifically provided in an amendment of this
paragraph (d) adopted in accordance with paragraph 13, payments under this
paragraph 4 shall be in lieu of any benefits that may be otherwise payable to or
on behalf of the Executive pursuant to the terms of any severance pay
arrangement of the Company or any Subsidiary or any other, similar arrangement
of the Company or any Subsidiary providing benefits upon involuntary termination
of employment.
5. Duties on Termination. Subject to the terms and conditions
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of this Agreement, during the period beginning on the date of delivery of a
Notice of Termination and ending on the Date of Termination, the Executive shall
continue to perform his duties as set forth in this Agreement, and shall also
perform such services for the Company as are necessary and appropriate for a
smooth transition to the Executive's successor, if any. Notwithstanding the
foregoing provisions of this paragraph 5, the Company may suspend the Executive
from performing his duties under this Agreement following (i) the delivery of a
Notice of Termination by the Executive providing for the resignation by the
Executive of his positions with the Company provided for herein, or (ii)
delivery by the Company of a Notice of Termination providing for the Executive's
termination of employment for any reason, or (iii) notification to the Executive
of the intention to terminate the Executive for Cause as defined in paragraph
3(c)(ii); provided, however, that during the period of suspension in any of the
foregoing cases (which shall in each such case end on the Date of Termination),
the Executive shall continue to be treated as employed by the Company for all
other purposes, and his rights to compensation or benefits shall not be reduced
by reason of the suspension.
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6. Mitigation and Set-Off. The Executive shall not be required to
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mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise. The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any amounts
owed to the Company by the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any
amounts which might have been earned by the Executive in other employment had he
sought such other employment.
7. Confidential Information. Except as may be required by the lawful
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order of a court or agency of competent jurisdiction, or except to the extent
that the Executive has express authorization from the Company, the Executive
agrees, both while he is employed by the Company and thereafter, to keep secret
and confidential all non-public information (including, without limitation,
information regarding litigation and pending litigation) concerning the Company
and the Subsidiaries which was acquired by or disclosed to the Executive during
the course of his employment with the Company, or during the course of his
consultation with the Company following his termination of employment
(regardless of whether consultation is pursuant to paragraph 9), and not to
disclose the same, either directly or indirectly, to any other person, firm or
business entity, or to use it in any way. The Executive agrees that, to the
extent that any court or agency seeks to have him disclose Confidential
Information, the Executive shall promptly inform the Company and shall take such
reasonable steps as are available to the Executive to prevent disclosure of such
Confidential Information until the Company has been informed of such requested
disclosure, and the Company has an opportunity to respond to such court or
agency; provided, that the Executive shall not be required hereby to do so if
and to the extent that the Executive would thereby incur personal financial or
other risk. To the extent that the Executive obtains information on behalf of
the Company or any of the Subsidiaries that may be subject to attorney-client
privilege as to the Company's or any Subsidiary's attorneys, the Executive shall
take reasonable steps to maintain the confidentiality of such information and to
preserve such privilege. Nothing in the foregoing provisions of this paragraph 7
shall be construed so as to prevent the Executive from using, in connection with
his employment for himself or an employer other than the Company or any of the
Subsidiaries, knowledge which was acquired by him during the course of his
employment with the Company and the Subsidiaries that is generally known to
persons of his experience in other companies in the same industry. Nothing in
this paragraph 7 or in paragraph 8 shall be construed as limiting the
Executive's duty of loyalty to the Company while he is employed by the Company,
or any other duty he may otherwise have to the Company while he is employed by
the Company or thereafter.
8. Non-Disparagement. The Executive agrees that both while he is
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employed by the Company and after the Date of Termination he shall not make any
false, defamatory or disparaging statements about the Company, the Subsidiaries,
or the officers or directors of the Company or the Subsidiaries. Both while the
Executive is employed by the Company and after his Date of Termination, the
Company agrees, on behalf of itself and the
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Subsidiaries, that neither the officers nor the directors of the Company or the
Subsidiaries shall make any false, defamatory or disparaging statements about
the Executive.
9. Defense of Claims. The Executive agrees that, for the period
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beginning on the Effective Date and continuing after his Date of Termination,
the Executive will cooperate with the Company in defense of any claims that may
be made against the Company, and will cooperate with the Company in the
prosecution of any claims that may be made by the Company, to the extent that
such claims may relate to services performed by the Executive for the Company.
The Executive agrees promptly to inform the Company if he becomes aware of any
lawsuits involving such claims that may be filed against the Company. The
Company agrees to reimburse the Executive for all of the Executive's reasonable
out-of-pocket expenses associated with such cooperation, including travel
expenses. The Executive also agrees promptly to inform the Company if he is
asked to assist in any investigation of the Company (or its actions) that may
relate to services performed by the Executive for the Company, regardless of
whether a lawsuit has then been filed against the Company with respect to such
investigation.
10. Change of Control Payments.
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(a) Payments. If, within twelve months after the occurrence of a
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Change of Control (as defined in paragraph 10(c) hereof), the Executive's
employment by the Company or its successor is terminated pursuant to paragraph
3(d) (relating to Constructive Discharge) or paragraph 3(g) (relating to
termination by the Company without Cause), then the Executive shall be entitled
to the following benefits in lieu of, and not in addition to, the amounts
otherwise payable to the Executive pursuant to paragraph 4(c) hereof:
(i) the Company shall pay to the Executive the amounts
set forth in paragraph 4(a); and
(ii) all stock options or other equity awards held by the
Executive with respect to the Company's Common Stock shall become
fully vested; and
(iii) the Executive shall be entitled to accelerated
supplemental retirement benefit credits as set forth in Exhibit B; and
(iv) in lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the
Company shall pay to the Executive a lump sum payment in an amount
which is equal to three (3) times the Executive's Average Salary and
Bonus. For purposes of this paragraph (iv) only, "Average Salary and
Bonus" shall mean the greater of (A) the Executive's annual salary and
annual bonus, including any amounts deferred by the Executive under
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the Company's Profit Sharing and Savings Plan, Cafeteria Plan, and
Executive Deferred Compensation Plan, for the three full calendar
years prior to the Executive's termination of employment (regardless
of whether all of such years occurred during the term of this
Agreement) or such smaller number of full calendar years as the
Executive has been employed by the Company, divided by the number of
such full calendar years, or (B) the Executive's annual salary and
annual bonus, including any amounts deferred by the Executive under
the Company's Profit Sharing and Savings Plan, Cafeteria Plan, and
Executive Deferred Compensation Plan, for the three full calendar
years with respect to which annual bonuses have been determined prior
to the occurrence of the Change of Control (regardless of whether all
of such years occurred during the term of this Agreement) or such
smaller number of full calendar years as the Executive has been
employed by the Company, divided by the number of such full calendar
years.
(b) Tax Protection Policy. The Executive shall receive the benefits of
---------------------
the Tax Protection Policy attached hereto as Exhibit C, which is hereby
---------
incorporated by reference.
(c) Definition of "Change of Control." A "Change of Control" of the
--------------------------------
Company shall be deemed to have occurred upon the happening of any of the
following events:
(i) the acquisition or holding of the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (an "Acquiror") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of the combined voting power of the then outstanding shares of
Common Stock and other stock of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"), but excluding for this purpose any such acquisition (or
holding) by (i) the Company or any corporation controlled by the
Company; (ii) any employee benefit plan (or related trust) of the
Company or any corporation controlled by the Company; (iii) any
acquisition or ownership by an Acquiror of 25% of the Outstanding
Company Voting Securities as a result of an acquisition of common
stock or voting securities by the Company which, by reducing the
number of shares of the Company's common stock or voting securities
outstanding, increases the proportionate number of shares beneficially
owned by such Acquiror to 25% or more of the Outstanding Company
Voting Securities; provided, however, that if an Acquiror shall become
the beneficial owner of 25% or more of the Outstanding Company Voting
Securities by reason of a share acquisition by the Company as
described above and shall, after such share acquisition by the
Company, become the beneficial owner of any additional
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13
shares of common stock or voting securities of the Company, then such
acquisition shall constitute a Change of Control; or (iv) any
corporation with respect to which, following such acquisition, more
than 50% of, respectively, the then outstanding shares of Common Stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Voting Securities immediately prior to such
acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then Outstanding Company
Voting Securities;
(ii) individuals who, as of the date hereof, constitute
the Board of Directors (the "Continuing Directors") cease for any
reason to constitute at least a majority of the Board, provided that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the stockholders of Company,
was approved by a vote of at least a majority of the persons then
comprising the Continuing Directors shall be considered a Continuing
Director, but excluding, for this purpose, any such individual whose
initial election as a member of the Board is in connection with an
actual or threatened "election contest" relating to the election of
the directors of the Company (as such term is used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(iii) consummation by the Company of (A) a reorganization,
merger or consolidation of the Company, with respect to which in each
case all or substantially all of the individuals and entities who were
the respective beneficial owners of the Outstanding Company Voting
Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly and indirectly, more than
50% of, respectively, the then outstanding shares of Common Stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
corporation or other entity resulting from such reorganization, merger
or consolidation, or (B) a complete liquidation or dissolution of the
Company, or (C) the sale or other disposition of all or substantially
all of the assets of the Company."
11. Remedies. The Executive acknowledges that the Company would be
--------
irreparably injured by a violation of paragraph 7 or 8, and agrees that the
Company, in addition to any other remedies available to it for such breach or
threatened breach, shall be entitled to a preliminary injunction, temporary
restraining order, or other equivalent relief, restraining the
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14
Executive from any actual or threatened breach of paragraph 7 or paragraph 8. If
a bond is required to be posted in order for the Company to secure an injunction
or other equitable remedy, the parties agree that said bond need not be more
than a nominal sum.
12. Nonalienation. The interests of the Executive under this Agreement
-------------
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Executive or the Executive's beneficiary.
13. Amendment; Other. This Agreement may be amended or cancelled only
----------------
by mutual agreement of the parties in writing and may be amended without the
consent of any other person. So long as the Executive lives, no person, other
than the parties hereto, shall have any rights under or interest in this
Agreement or the subject matter hereof. All judgments made and actions taken by
the parties to this Agreement shall be made or taken, as the case may be, in
good faith.
14. Applicable Law. The provisions of this Agreement shall be
--------------
construed in accordance with the laws of the State of California without regard
to the conflict of law provisions of any state.
15. Severability. The invalidity or unenforceability of any provision
------------
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement shall be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
16. Waiver of Breach. No waiver by any party hereto of a breach of any
----------------
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
shall operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach shall not deprive such party of the right to take action
at any time while such breach continues.
17. Successors. This Agreement shall be binding upon, and inure to the
----------
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business. The rights of the
Executive to receive payment of amounts of compensation provided for in this
Agreement shall inure to the benefit of, and may be enforced by, the Executive's
estate in the event of his death.
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15
18. Notices. Notices and all other communications provided for
-------
in this Agreement shall be in writing and shall be delivered personally or sent
by registered or certified mail, return receipt requested, postage prepaid, or
sent by facsimile or prepaid overnight courier to the parties at the addresses
set forth below (or at such other addresses as shall be specified by the parties
by like notice). Such notices, demands, claims and other communications shall be
deemed given: (i) in the case of delivery by overnight service with guaranteed
next day delivery, such next day or the day designated for delivery; (ii) in the
case of certified or registered U.S. mail, five days after depositing the U.S.
mail; or (iii) in the case of facsimile, the date upon which the transmitting
party received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service are to be delivered to
the addresses set forth below: to the Company: Catellus Development Corporation
000 Xxxxxxx Xxxxxx, 0xx Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 Attention: General
Counsel to the Executive: Xxxxxx X. Rising 000 Xxxxxxxx Xxxx Xx Xxxxxx,
Xxxxxxxxxx 00000 Each party, by written notice furnished to the other party, may
modify the applicable delivery address, except that notice of change of address
shall be effective only upon receipt.
19. Arbitration of All Disputes. Any controversy or claim
---------------------------
arising out of or relating to this Agreement (or the breach thereof) shall be
settled by binding and non-appealable arbitration in San Francisco, California
by an arbitrator. The Executive and the 25 Company shall initially confer and
attempt to reach agreement on the individual to be appointed as such arbitrator.
If no agreement is reached, the parties shall request from the San Francisco
office of JAMS/Endispute, Inc. ("JAMS") a list of five retired judges affiliated
with JAMS. The Executive and the Company shall each alternately strike names
from such list until only one name remains and such person shall thereby be
selected as the arbitrator. Except as otherwise provided for herein, such
arbitration shall be conducted in conformity with the procedures specified in
the California Arbitration Act (Cal. C.C.P. (S)(S)1280et seq.) The arbitrator
shall not be authorized to award punitive damages with respect to any claim,
disputes or controversy. The parties intend that this paragraph 19 shall be
valid, binding, enforceable and irrevocable and shall survive the termination of
this Agreement and that any arbitration proceeding hereunder shall be concluded
within 60 days after the initiation thereof. The Company and the Executive shall
jointly so instruct the Arbitrator chosen to arbitrate any dispute arising
hereunder and agree that the criteria used by them to select such arbitrator
shall include his or her availability to act expeditiously within not more than
the 60-day period referred to herein. The parties hereto agree that the final
decisions of the arbitrator so chosen may be enforced by a court of competent
jurisdiction.
20. Costs of Enforcement. In the event any legal action is
--------------------
brought or that arbitration is commenced in connection with any dispute relating
to the rights and obligations of the parties hereunder the prevailing party or
parties shall be entitled to recover reasonable
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16
attorneys' fees and other costs incurred in such action or proceeding in
addition to any other relief to which such party may be entitled.
21. Survival of Agreement. Except as otherwise expressly
---------------------
provided in this Agreement, the rights and obligations of the parties to this
Agreement shall survive the termination of the Executive's employment with the
Company.
22. Title and Headings. Titles and headings in this Agreement
------------------
are for ease of reference and convenience only, and shall not be construed to
affect the meaning of any provision of this Agreement.
23. Enforceability. Except as otherwise noted herein, the
--------------
enforceability of this Agreement shall not cease or otherwise be adversely
affected by the termination of the Executive's employment with the Company.
24. Indemnity. To the fullest extent permitted by applicable
---------
law and the bylaws of the Company as from time to time in effect, the Company
shall indemnify the Executive and hold the Executive harmless against and from
any acts or decisions made in good faith while performing services for the
Company, and the Company shall use its best efforts to obtain coverage for the
Executive under any liability insurance policy or policies now in force or
hereafter obtained during the term of this Agreement. To the same extent, the
Company will, upon receipt of such undertaking from the Executive as may be
required by applicable law, pay as incurred all expenses, including reasonable
attorneys' fees and costs of court approved settlements, actually and reasonably
incurred by the Executive in connection with defense of or settlement of any
action, suit or proceeding and in connection with any appeal thereon, which has
been brought against the Executive by reason of the Executive's service as an
officer or agent of the Company or of a Subsidiary.
25. Acknowledgment by Executive. The Executive represents to
---------------------------
the Company that he is knowledgeable and sophisticated as to business matters,
including the subject matter of this Agreement, that he has read this Agreement
and that he understands its terms. The Executive acknowledges that, prior to
assenting to terms the terms of this Agreement, he has been given a reasonable
time to review it, to consult with counsel of his choice, and to negotiate at
arm's-length with the Company as to its contents. The Executive and the Company
agree that the language used in this Agreement is the language chosen by the
parties to express their mutual intent, and that no rule of strict construction
is to be applied against any party hereto.
26. Effect on Prior Agreement. Upon the execution of this
-------------------------
Agreement, the Prior Agreement shall be deemed terminated and of no further
force or effect (except to the extent contemplated by the final sentence of
Section 2(b)) without any consequence to the Executive or the Company of any
kind, and the Prior Agreement shall be deemed superseded and replaced for all
purposes by this Agreement.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand,
and the Company has caused these presents to be executed in its name and on its
behalf, all as of the Effective Date.
"COMPANY"
CATELLUS DEVELOPMENT CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
_____________________________
Xxxxxxx X. Xxxxxx
Lead Independent Director
By: /s/ Xxxxxxx X. Xxxxxx
_____________________________
Xxxxxxx X. Xxxxxx
Chair of the Compensation & Benefits
Committee of the Board of Directors
"EXECUTIVE"
/s/ Xxxxxx X. Rising
_____________________________
Xxxxxx X. Rising
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18
Exhibit A
Benefits Memorandum
-------------------
.. Reimbursement of all business expenses consistent with the Company's
expense reimbursement policies and the Company's practices under the Prior
Agreement and in accordance with such policies as may be approved from time
to time by the Board.
.. Medical Insurance.
Choice of Prudential (Point of Service) or Prudential HMO
.. Dental Insurance
Phoenix Home Life
.. Short-Term/Long-Term Disability Insurance. Life Insurance
$15 million of life insurance for Executive (Supplemental also available
for family members)
.. Club Memberships - Monthly fees for membership in one golf club and three
luncheon clubs in California
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A-1
Exhibit B
Deferred Compensation Plan Credits
----------------------------------
1. In lieu of the SERP benefit provided under the Prior Agreement,
effective January 1, 2002, the Company shall credit the Executive's account (the
"Executive's Account") in the Company's Deferred Compensation Plan with
$2,000,000.
2. Subject to the limitations set forth in paragraph 5, below, with
respect to each full calendar year of the Executive's employment by the Company
during the Agreement Term (January 1, 2002 to December 31, 2006), as soon as
practicable after the Company has determined the amount of the Executive's
annual bonus for each such year, the Company shall credit the Executive's
Account with an amount (the "Annual Credit") equal to the present value of an
annuity which would (a) pay to the Executive, during his lifetime, an amount
equal to 5% of the Executive average annual Cash Compensation (as defined below)
for the three calendar years completed immediately prior to the date on which
the credit is determined and (b) pay to the Executive's wife after the
Executive's death, if she survives him, for her lifetime, an amount equal to
one-half of the annual amount which would have been payable to the Executive.
"Cash Compensation" shall mean the sum of the Executive's salary for the year in
question and the annual bonus earned in such year, regardless of when such bonus
is actually paid, and shall not include any severance benefits paid under this
Agreement or any plan of the Company.
3. Subject to the limitations set forth in paragraph 5, below, if the
Executive's employment with the Company terminates under circumstances described
in paragraph 3(a) (relating to the Executive's death), paragraph 3(b) (relating
to the Executive's being Disabled), paragraph 3(d) (relating to Constructive
Discharge) or paragraph 3(g) (relating to termination by the Company without
Cause) of the Agreement, as soon as practicable after the termination date, the
Company shall credit the Executive's Account with an amount equal t0 the product
of the Annual Credit and the number of full calendar years between January 1 of
the year in which the termination occurs and December 31, 2006. For example, if
the Executive's employment is terminated by the Company pursuant to paragraph
3(g) on May 15, 2004, the Company shall credit the Executive's Account with the
product of (i) the Annual Credit determined on the basis of the Executive's
average annual Cash Compensation for the 2001, 2002 and 2003 calendar years and
(ii) 3.
4. The present value of the annuity used to determine the amount of the
Annual Credits shall be determined on the basis of the following actuarial
assumptions: 5.1% discount rate, mortality at 80% of 1983 GAM.
5. Notwithstanding any other provision of the Agreement to the
contrary, (i) except as provided in the following clause (ii), the maximum
amount of the Annual Credit for any year during the Agreement Term shall be
$1,000,000, (ii) to the extent that the Annual Credit for any
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B-1
year is less than $1,000,000, the difference between $1,000,000 and the Annual
Credit shall be carried forward and shall be applied as an addition to the
$1,000,000 limitation for any year for which the Annual Credit would exceed
$1,000,000 and (iii) the Annual Credits which may be made under this Exhibit B
to the Executive's Account shall not exceed $7,000,000 under any circumstances.
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B-2
Exhibit C
Tax Protection Policy
---------------------
This Exhibit C shall apply if it is determined that any
payment, distribution or benefit provided (including, without limitation, the
acceleration of any payment, distribution or benefit and the acceleration of
exercisability of any stock option) to the Executive or for the Executive's
benefit (whether paid or payable or distributed or distributable) pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including, without limitation,
any stock option, stock appreciation right or similar right, or the lapse or
termination of any restriction on or the vesting or exercisability of any of the
foregoing (the "Payments") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), by reason of
being "contingent on a change in the ownership or control" of the Company,
within the meaning of Section 280G of the Code or to any similar tax imposed by
state or local law, or any interest or penalties with respect to such excise tax
(such tax or taxes, together with any such interest or penalties, are
collectively referred to as the "Excise Tax"). If the Payments are subject to
the Excise Tax and it is determined that the Parachute Value of the Payments (as
defined below) exceeds 110% of the Safe Harbor Amount (as defined below), the
Executive shall be entitled to receive from the Company an additional payment
(the "Gross-Up Payment") in an amount such that the net amount of the Payments
and the Gross-Up Payment retained by the Executive after the calculation and
deduction of all Excise Taxes (including any interest or penalties imposed with
respect to such taxes) on the payment and all federal, state and local income
tax, employment tax and Excise Tax (including any interest or penalties imposed
with respect to such taxes) on the Gross-Up Payment provided for in this Exhibit
-------
C, and taking into account any lost or reduced tax deductions on account of the
-
Gross-Up Payment, shall be equal to the Payments. If it shall be determined that
the Parachute Value of the Payments does not exceed 110% of the Safe Harbor
Amount, then no Gross-Up Payment shall be made to the Executive and the
Executive shall bear all expense of, and be solely responsible for, any Excise
Tax with respect to the Payments; provided, however, that the Executive may
elect to specify which portion of the Payments shall be reduced so that no
portion thereof shall be subject to the Excise Tax. For the purposes of this
Exhibit C, (a) "Parachute Value of the Payments" shall mean the present value as
---------
of the date of the Change of Control for purposes of Section 280G of the Code of
the portion of such Payments that constitutes a "parachute payment" under
Section 280G(b)(2), as determined by the Accountants (as defined below) for
purposes of determining whether and to what extent the Excise Tax will apply to
such Payments, and (b) "Safe Harbor Amount" shall mean the maximum Parachute
Value of the Payments that the Executive can receive without any Payments being
subject to the Excise Tax
(i) All determinations required to be made under this
Exhibit C, including whether and when the Gross-Up Payment is required and the
---------
amount of such Gross-Up
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C-1
Payment, and the assumptions to be utilized in arriving at such determinations
shall be made by the Accountants (as defined below) which shall provide the
Executive and the Company with detailed supporting calculations with respect to
such Gross-Up Payment within fifteen (15) business days of the receipt of notice
from the Executive or the Company that the Executive has received or will
receive a Payment. For the purposes of making the determinations and
calculations required herein, the Accountants may make reasonable assumptions
and approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Section 280G and 4999 of the
Code, provided that the Accountants' determinations must be made on the basis of
"substantial authority" (within the meaning of Section 6662 of the Code). For
the purposes of this Exhibit C, the "Accountants" shall mean the Company's
---------
independent certified public accountants serving immediately prior to the Change
of Control. In the event that the Accountants are also serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Executive may appoint another nationally recognized public accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Company.
(ii) For the purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amount of such Excise
Tax, such Payments will be treated as "parachute payments" within the meaning of
Section 280G of the Code, and all "parachute payments" in excess of the "base
amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the opinion
of the Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay federal income taxes at the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made and to pay any applicable state and local income
taxes at the highest applicable marginal rate of taxation for the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of the Executive's adjusted gross income); and
to have otherwise allowable deductions for federal, state and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in the Executive's adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be paid by
the Company at the time the Executive is entitled to receive the Payment and in
no event will any Gross-Up Payment be paid later than five days after the
receipt by the Executive of the Accountant's determination. Any determination by
the Accountants shall be binding upon the Company and the Executive.
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C-2
(iii) As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accountants hereunder, it is possible that the Gross-Up Payment made will have
been an amount less than the Company should have paid pursuant to this Exhibit C
---------
(the "Underpayment"). In the event that the Company were to exhaust its remedies
pursuant to paragraph (v) below and the Executive is required to make a payment
of any Excise Tax, the Underpayment shall be promptly paid by the Company to or
for the Executive's benefit.
(iv) The Executive and the Company shall each provide
the Accountants access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be, reasonably requested
by the Accountants, and otherwise cooperate with the Accountants in connection
with the preparation and issuance of the determination contemplated by this
Exhibit C.
---------
(v) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes, interest and/or penalties with respect to such
claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim;
(B) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith in
order to effectively contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claim; provided, however, that the Company shall
bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify the
Executive for and hold Executive harmless from, on an after-tax basis, any
Excise Tax or income tax (including interest and penalties with respect thereto)
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C-3
imposed as a result of such representation and payment of all related costs and
expenses. Without limiting the foregoing provisions of this Exhibit C, the
---------
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and xxx for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to Executive, on an
interest-free basis, and shall indemnify the Executive for and hold the
Executive harmless from, on an after-tax basis, any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance
(including as a result of any forgiveness by the Company of such advance);
provided, further, that any extension of the statute of limitations relating to
the payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
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C-4
