EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT made this 1st day of July, 2004, by and between
AGREE REALTY CORPORATION, a Maryland corporation (the "Company"), and XXXXXXX X.
XXXX (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is expected to make certain contributions to the
financial strength of the Company;
WHEREAS, the Company desires to assure itself of the continuity of
management and desires to establish certain compensation rights of certain of
its key senior executive officers, including the Executive; and
WHEREAS, the Company desires to employ the Executive and the Executive
desires to accept such employment on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto hereby agree as follows:
1. EMPLOYMENT; TERM. The Company hereby employs the Executive as Vice
President, Finance and Secretary of the Company and the Executive agrees to
serve the Company in such capacity for the period commencing on July 1, 2004
(the "Effective Date") and ending on June 30, 2007 (the "Initial Term"). In
addition the Company may, upon giving the Executive 120 days advance written
notice either prior to the termination of the Initial Term or
any extension thereof, extend this agreement for two (2) additional one year
terms, as extended, the "Term."
2. TERMINATION. Subject to the terms and conditions set forth herein, the
Executive's employment may be terminated by either party hereto upon thirty (30)
days' written notice to the other party hereto.
3. DUTIES. The Executive shall be responsible for the supervision, control
and conduct of all the business and affairs of the Company and shall have such
additional duties and any additional responsibilities as are normally assigned
to a Chief Financial Officer, Vice President and Secretary which may from time
to time be reasonably designated by the Board of Directors of the Company (the
"Board"), provided that in no event shall the scope of his duties and the extent
of his responsibilities be substantially different from the duties and
responsibilities usually associated with those positions in a publicly-held
corporation similar in size and function to the Company. The Executive agrees
that he will conduct all investigations, make all inquiries, provide all
services and execute all reports, certifications and/or attestation required of
him in his capacity as the Chief Financial Officer of the Company and the
"Principal Financial Officer" of the Company (as defined under the rules and
regulations of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) by the Xxxxxxxx-Xxxxx Act of 2002, the related rules and regulations
promulgated by the Securities and Exchange Commission and the rules and
regulations of the New York Stock Exchange. At all times, the Executive shall be
subject to the direction of the Board. During the period the Executive is
employed by the Company (the "Employment Period"), the Executive shall devote
his full business time and best efforts to the business and affairs of the
Company and its subsidiaries, except for any business activities rendered by the
Executive in connection with the partnerships listed on Schedule A. The
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Executive will not be prevented from (i) engaging in any civic or charitable
activity for which the Executive receives no compensation or other pecuniary
advantage; (ii) investing his personal assets in businesses which do not compete
with the Company, provided that such investment will not require any services on
the part of the Executive in the operation of the affairs of the businesses in
which investments are made which would unreasonably interfere with his
obligations hereunder; (iii) purchasing securities in any corporation whose
securities are publicly traded, provided that such purchases will not result in
the Executive owning beneficially at any time five percent (5%) or more of the
equity securities of any corporation engaged in a business competitive with that
of the Company; (iv) serving as a director of any corporation that does not
engage in any business which is competitive with the then current business of
the Company as any of its subsidiaries (as defined in Section 7 hereof); or (v)
participating in any other activity approved in advance in writing by the Board.
4. COMPENSATION. The Company shall pay the Executive a salary at the
initial rate of one hundred thirty one thousand dollars ($131,000.00) per annum,
subject to review by the Board's Compensation Committee. Such compensation shall
be shall be payable in accordance with the usual payroll practices of the
Company, as compensation to the Executive for the services rendered by the
Executive hereunder, including, but not limited to, all services rendered by the
Executive as an officer or director of the Company and its subsidiaries. The
Compensation Committee shall review the Executive's salary immediately prior to
the end of each fiscal year during the Employment Period to determine whether
the Executive's salary shall be adjusted based on such criteria as the
Compensation Committee shall from time to time establish. (For purposes of this
Employment Agreement, the term "salary" shall mean the amount established and
adjusted from time to time pursuant to this Section 4.)
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5. BENEFITS.
(a) The Company agrees to reimburse the Executive for all reasonable
and necessary travel, business entertainment and other business expenses
incurred by the Executive in connection with the performance of his duties under
this Employment Agreement. Such reimbursements shall be made by the Company on a
timely basis upon submission by the Executive of documentation in accordance
with the Company's standard procedures. All such reimbursements shall be subject
to limitations, which may from time to time be prescribed by the Board.
(b) The Executive shall be entitled to participate in any and all
life insurance, medical insurance group health, disability insurance, and other
benefit plans which are made generally available during the Employment Period by
the Company to executives of the Company, including, but not limited to, the
Company's Stock Incentive Plan, Profit Sharing Plan and performance Bonus Plan
(to the extent that the Executive qualifies under the eligibility provisions of
such plan or plans). Additionally, the Executive shall be entitled to receive
annual paid vacation and paid holidays made available pursuant to Company policy
to all of the senior executives of the Company.
(c) In the event of the death or disability (as defined below) of
the Executive, the Executive's employment hereunder shall terminate, and in
addition to any amounts payable at such time and in accordance with the terms of
Section 4 hereof (appropriately pro-rated), the Company shall, for the longer of
(i) the remainder of the calendar year in which the Executive dies or becomes
disabled or (ii) six (6) months, pay to the Executive or the Executive's
personal representative, as the case may be, the Executive's salary at the date
of such death or disability,
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and the pro-rata portion of the Executive's average bonus over the previous
three calendar years. In addition, all unvested shares of the Company's common
stock issued to the Executive under the Company's Stock Incentive Plan shall
become fully vested. For the purposes of this Employment Agreement, the term
"disability" shall mean the absence of the Executive, due to physical or mental
illness, on a full time basis for one hundred twenty (120) consecutive business
days or for shorter periods which aggregate more than four months during any
consecutive twelve (12) month period.
(d) In the event the employment of the Executive is terminated by
the Company for any reason other than for cause (as defined below), the
Executive shall be entitled to all amounts payable during the Initial Term
(including, but not limited to, salary at the then applicable rate) within ten
(10) days of such termination and the Executive shall have the right to continue
to participate in all benefit plans made generally available by the Company to
its executives during the Initial Term. In addition, all unvested shares of the
Company's common stock issued to the Executive under the Company's Stock
Incentive Plan shall become fully vested. For purposes of this Section 5(d) the
term "cause" shall mean: (i) the Executive's willful failure or refusal to
perform specific reasonable written directives of the Board, which directives
are consistent with the scope and nature of the Executive's duties and
responsibilities under this Employment Agreement, and which are not remedied by
the Executive within sixty (60) days after being notified, in writing, of his
failure by the Board; (ii) the Executive's conviction of a felony; (iii) any act
of dishonesty involving the Company which results in an unjust gain or
enrichment to the Executive at the expense of the Company; (iv) any act
involving moral turpitude of the Executive which adversely affects the business
of the Company; or (v) a material breach by the Executive of his obligations
under Section 7 hereof. For purposes
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of this Agreement, no act or failure to act on the part of the Executive shall
be deemed "willful" if it was due primarily to an error in judgment or
negligence, but shall be deemed "willful" only if done or omitted to be done by
the Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company.
The Executive shall not be deemed to have been terminated for "cause"
hereunder unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the Board then in office at a meeting of the Board called and held
for such purpose, after reasonable notice to the Executive and an opportunity
for the Executive, together with his counsel (if the Executive chooses to have
counsel present at such meeting), to be heard before the Board, finding that, in
the good faith opinion of the Board, the Executive had committed an act
constituting "cause" as herein defined and specifying the particulars thereof in
detail.
(e) In the event this Employment Agreement is terminated by the
Company for "cause," the Executive shall forfeit his right to any and all
benefits (other than any previously vested benefits, including, without
limitation, the Executive's salary through the date of termination) which the
Executive would otherwise have been entitled to receive pursuant to the terms of
this Employment Agreement.
6. CHANGE IN CONTROL OF THE COMPANY.
If a Change in Control (as defined below) of the Company occurs prior to
the scheduled expiration of the Term of this Employment Agreement and within
three years after the Change in Control of the Company, the Executive is
terminated by the Company for reasons other than death, disability, or cause,
the Company, or any successor thereto, will pay to the Executive
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within 30 days of Executive's termination of employment, an amount equal to the
greater of (i) three (3) times Executive's compensation, or (ii) the Executive's
compensation due over the Initial Term of this agreement which, for purposes of
this Section, "Executive compensation" shall mean an amount equal to the highest
annualized rate of Executive's salary prior to the date of termination. In
addition, all unvested shares of the Company's common stock issued to the
Executive under the Company's Stock Incentive Plan shall become fully vested.
For purposes of this Agreement, a "Change in Control" shall have occurred
if at any time during the Term any of the following events occurs:
(a) The Company is merged, consolidated or reorganized into or with
another corporation or other legal person and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as hereinafter defined) of the Company immediately prior to such
transaction;
(b) The Company sells all or substantially all of its assets to any
other corporation or other legal person, less than a majority of the combined
voting power of the then-outstanding voting securities of which are held in the
aggregate by the holders of Voting Stock of the Company immediately prior to
such sale;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to the
Exchange Act, disclosing that any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of
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securities representing 25% or more of the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors of the Company ("Voting Stock");
(d) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(e) If during any period of two consecutive years, individuals who
at the beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's stockholders, of each
director of the Company first elected during such period was approved by a vote
of at least two-thirds of the directors of the Company then still in office who
were directors of the Company at the beginning of any such period.
Notwithstanding the foregoing provision of Section 6(c) or 6(d) hereof, a
"Change in Control" shall not be deemed to have occurred for purposes of this
Agreement solely because the Company, an entity in which the Company directly or
indirectly beneficially owns 50% or more of the voting securities of such
entity, any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company either files or becomes obligated to file a
report or a proxy statement under or in response to Schedule 13D, Schedule
14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act, disclosing beneficial ownership by it of
shares of voting securities of the Company, whether
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in excess of 25% or otherwise, or because the Company, reports that a change in
control of the Company has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.
7. NON-COMPETITION. The Executive agrees that if the Executive is
terminated for "cause" or voluntarily terminates his employment hereunder, that
for a one year period the Executive shall not engage in any business which is
competitive with the then current business of the Company or any of its
subsidiaries. For the purposes of this Section 7 a business shall be deemed
competitive if it consists of or includes any type or line of business engaged
in by the Company or any of its subsidiaries at the time of such terminations
and which is conducted in whole or in part, within those states where the
Company then conducts business. The executive shall be deemed, directly or
indirectly, to engage in a business if he participates in such business as a
director, officer, stockholder, employee, salesman, partner or individual
proprietor, or if he participates in such business as an investor who has made
advances on loan, contributions to capital or expenditures for the purchase of
stock, permits his name to be used by, acts as a paid consultant or paid advisor
to, or if the Executive exerts a controlling influence over such business,
provided that nothing herein contained shall be deemed to preclude the purchase
of securities of publicly owned companies which securities are listed on a
national securities exchange, but the total holding of any such securities so
listed shall be limited to five percent (5%) of the amount of such securities
outstanding.
8. CONFIDENTIALITY. The Executive shall not at any time use or divulge,
furnish or make accessible to anyone (other then in the regular course of the
business of the Company or any of its subsidiaries) any knowledge or information
of trade secrets and proprietary information which has not otherwise become
publicly available (including, but not limited to,
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any information concerning customers or accounts) with respect to the business
affairs of the Company or any of its subsidiaries.
9. NOTICES. All notices relating to this Employment Agreement shall be
in writing and shall be deemed to have been given at the time when delivered
personally or sent in the United States by registered or certified mail, return
receipt requested, in a postpaid envelope, addressed to the other party at the
address set forth below, or to such changed address as the other party may have
fixed by notice; provided, however, that any notice of change of address shall
be effective only upon receipt:
To the Company Agree Realty Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
To the Executive 0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
10. ASSIGNABILITY, BINDING EFFECT AND SURVIVAL. This Employment
Agreement shall inure to the benefit of and be binding upon the Company, its
successors and assigns, including without limitation any corporation which may
acquire all or substantially all of the Company's assets and business or with or
into which the Company may be consolidated or merged, and shall inure to the
benefit of and be binding upon the Executive, his heirs, executors,
administrators and legal representatives, provided that the obligations of the
Executive hereunder may not be delegated.
11. COMPLETE UNDERSTANDING; AMENDMENT; WAIVER. This Employment Agreement
constitutes the complete understanding between the parties with respect to the
employment of the Executive hereunder, and no statement, representation,
warranty or covenant has been made by either party with respect thereto except
as expressly set forth herein. This Employment
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Agreement shall not be altered, modified, amended or terminated except by
written instrument signed by each of the parties hereto. Waiver by either party
hereto of any breach hereunder by the other party shall not operate as a waiver
of any other breach, whether similar to or different from the breach waived. No
delay on the part of the Company or the Executive in the exercise of any of
their respective rights or remedies shall operate as a waiver thereof, and no
single or partial exercise by the Company or the Executive of any such right or
remedy shall preclude other or further exercise thereof.
12. SEVERABILITY. If any provision of this Employment Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Employment Agreement or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid and unenforceable, shall not be
affected thereby, and each provision hereof shall be enforced to the fullest
extent permitted by law.
13. GOVERNING LAW. This Employment Agreement shall be governed and
construed in accordance with the internal laws of the State of Michigan without
regard to conflict of laws provisions.
14. INDEMNIFICATION. The Company shall indemnify the Executive against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred, in any action or proceeding
to which the Executive is made a party by reason of the fact that he is or was
an officer or director of the Company, to the fullest
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extent permitted by law, the By-laws of the Company and the Articles of
Incorporation of the Company.
15. COUNTERPARTS. This Employment Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all parties hereto.
16. TITLES AND CAPTIONS. All paragraph, article or section titles or
captions in this Employment Agreement are for convenience only and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Employment Agreement as of the date first above written.
AGREE REALTY CORPORATION
COMPENSATION COMMITTEE
By: /s/ Xxxx Xxxxxxxxx
----------------------
Name: Xxxx Xxxxxxxxx
Title: Chairman
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Xxxxxxx X. Xxxx
Executive
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SCHEDULE A
Xxxxxxxx Plaza
Brentwood Realty Associates
Xxxxx Realty Associates
Gas City Plaza
Grant Line Plaza
Greenwood Realty Associates
Xxxxxx Realty Associates
Xxxxxxx Realty Associates
Main Realty Associates
Xxxxxxxx Plaza
Parkway Plaza Limited Partnership
West Frankfort Plaza
T.M.J. Incorporated
Xxxxxxxx, Inc.
Schedule A - 1
