EXHIBIT 10.13
CORNERSTONE PROPERTY INC.
000 XXXX 00XX XXXXXX
XXX XXXX, XX 00000
TELEPHONE (000) 000-0000 FACSIMILE (000) 000-0000
[Date]
[Employee]
[Address]
RETENTION AGREEMENT
Dear [Employee]:
Cornerstone Properties Inc., a Nevada corporation (the "COMPANY"),
considers it essential to the best interests of its stockholders to take
reasonable steps to retain key management personnel. Further, the Board of
Directors of the Company (the "BOARD") recognizes that the uncertainty and
questions which may arise among management in the context of a change in control
of the Company could result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders.
The Board has determined, therefore, that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company and its subsidiaries, including
yourself, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from any possible change in control
of the Company.
In order to induce you to remain in the employ of the Company, the
Company has determined to enter into this letter agreement (this "AGREEMENT")
which addresses the terms and conditions of your employment in the event of a
change in control of the Company. Capitalized terms which are not otherwise
defined herein shall have the meanings assigned to such terms in Section 6 of
this Agreement.
SECTION 1. SEVERANCE PAYMENTS. In the event of your Involuntary
Termination during the Change in Control Period, the Company shall pay you the
following amounts, in one lump sum cash payment, promptly following your
Involuntary Termination:
(a) the full amount of any earned but unpaid base salary through
the Date of Termination at the rate in effect at the time of the
Notice of Termination;
(b) a payment (calculated on the basis of our Reference Salary)
for all unused vacation time which you may have accrued as of the Date
of Termination;
(c) a pro rata portion of the annual bonus for the year in which
your involuntary Termination occurs, calculated on the basis of your
target bonus for that year and on the assumption that all performance
targets have been or will be achieved; and
(d) an amount (the "SEVERANCE PAYMENT") equal to three times your
Annual Compensation.
Your right to receive the Severance Payment shall be conditioned upon
your execution of a release in favor of the Company which is in a form
reasonably acceptable to the Company and which is not revoked by you within the
revocation period provided therein (if any). The Severance Payment shall be
reduced by any amount of severance payable under any other plan, arrangement or
agreement under which you are entitled to receive cash severance payments from
the Company.
SECTION 2. BENEFIT CONTINUATION; RETIREMENT BENEFITS.
(a) CONTINUATION. In the event of your Involuntary Termination
during the Change in Control Period, you and your eligible dependents
shall continue to be eligible to participate during the Benefit
Continuation Period in the medical, dental, health, life and other
fringe benefit plans and arrangements applicable to you immediately
prior to your Involuntary Termination on the same terms and conditions
in effect for your and your dependents immediately prior to such
Involuntary Termination.
(b) RETIREMENT BENEFITS. This Agreement and any amounts
payable to you hereunder shall in no way limit or impair the amount of
any tax qualified or nonqualified pension or retirement benefits you
are entitled to receive from the Company under any Company plan or
arrangement in which you participate or under any contract or agreement
with the Company to which you are a party. Any such pension and
retirement benefits shall be in addition to any amounts payable to you
under this Agreement.
SECTION 3. DATE AND NOTICE OF TERMINATION. Any termination of
your employment by the Company or by you during the Change in Control Period
shall be communicated by a notice of termination to the other party hereto (the
"NOTICE OF TERMINATION"). The Notice of Termination shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated. The date of
your termination of employment with the Company and its subsidiaries (the "DATE
OF TERMINATION") shall be determined as follows: (1) if your employment is
terminated for Disability, 30 days after a Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such 30-day period), (ii) if your employment is terminated by the
Company in an Involuntary Termination, five days after the date the Notice of
Termination is received by you and (iii) if your employment is terminated by the
Company for Cause, the date specified in the Notice of Termination, PROVIDED,
that the events or circumstances cited by the Company as constituting Cause are
not cured by you during the cure period in accordance with the terms hereof. If
the basis for your Involuntary Termination is your resignation for Good Reason,
the Date of Termination shall be ten days after the date your Notice of
Termination is received by the Company, provided that the events or
circumstances cited by you as constituting Good Reason are not cured by the
Company during such period in accordance with the terms hereof. The Date of
Termination for a resignation of employment other than for Good Reason shall be
the date set forth in the applicable notice, which shall be no earlier than ten
days after the date such notice is received by the Company, unless waived by the
Company.
SECTION 4. NO MITIGATION OR OFFSET. You shall not be required
to mitigate the amount of any payment provided for herein by seeking other
employment or otherwise, nor shall the amount of any payment or
23
benefit provided for herein be reduced by any compensation earned by you as the
result of employment by another employer, except as specifically provided in
clause (ii) of the definition of "Benefit Continuation Period."
SECTION 5. SUCCESSORS; BINDING AGREEMENT.
(a) ASSUMPTION BY SUCCESSOR. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
expressly to assume and to agree to perform its obligations under this Agreement
in the same manner and to the same extent that the Company would be required to
perform such obligations if no such succession had taken place; PROVIDED,
HOWEVER, that no such assumption shall relieve the Company of its obligations
hereunder. As used herein, the "COMPANY" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform its obligations by operation of law or otherwise.
(b) ENFORCEABILITY; BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of you (and your personal representatives
and heirs) and the Company and any organization which succeeds to substantially
all of the business or assets of the Company, whether by means of merger,
consolidation, acquisition of all or substantially all of the assets of the
Company or otherwise, including, without limitation, as a result of a Change in
Control or by operation of law. This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
SECTION 6. DEFINITIONS. For purposes of this Agreement, the
following capitalized terms have the meanings set forth below:
"ANNUAL COMPENSATION" shall mean the sum of your Reference
Salary and Reference Bonus.
"BENEFIT CONTINUATION PERIOD" means the period beginning on
the Date of Termination and ending on the earlier to occur of (i) the third
anniversary of the Date of Termination and (ii) the date that you and your
dependents are eligible and elect coverage under the plans of a subsequent
employer which provide substantially equivalent or greater benefits to you and
your dependents.
"CAUSE" shall mean (a) your felony conviction, (b) your
willful disclosure of material trade secrets or other material confidential
information related to the business of the Company and its subsidiaries or (c)
your willful and continued failure to substantially perform your duties with the
Company (other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure resulting
from your resignation for Good Reason) after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, and which performance is not substantially
corrected by you within ten days of receipt of such demand. For purposes of the
previous sentence, no act or failure to act on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best interest
of the Company.
"CHANGE IN CONTROL" shall mean a change in control of the
Company of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act,
whether or not the Company is then subject to such reporting requirement;
PROVIDED, that without limitation, a Change in Control shall be deemed to have
occurred if:
24
(a) any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity or
person, or any syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act (other than the Company or any of its
subsidiaries or any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or of any of its subsidiaries),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding securities
entitled to vote in the election of directors of the Company; or
(b) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board and any new
directors, whose election by the Board or nomination for election by
the Company's stockholders was approved by a vote of at least
three-quarters of the directors then still in office who either were
directors at the beginning of the period or whose selection or
nomination for election was previously so approved (but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board), cease for any reason to constitute a
majority thereof; or
(c) there occurs a reorganization, merger, consolidation or
other corporate transaction involving the Company, in each case with
respect to which the stockholders of the Company immediately prior to
such transaction do not, immediately after such transaction, own more
than 50% of the combined voting power of the Company or other
corporation resulting from such transaction; or
(d) all or substantially all of the assets of the Company are
sold, liquidated or distributed;
PROVIDED, FURTHER, that an event described above shall not be deemed to be a
Change in Control for purposes of this Agreement if the Board has approved such
event prior to either (x) the occurrence of any of the events described in the
foregoing clauses (a) and (b) or (y) the commencement by any person other than
the Company of a tender offer for the Common Stock.
"CHANGE IN CONTROL DATE" shall mean the date on which a Change
in Control occurs.
"CHANGE IN CONTROL PERIOD" shall mean the two-year period
commencing on the Change in Control Date; PROVIDED, HOWEVER, that if your
employment with the Company and its subsidiaries terminates prior to the Change
in Control Date but on or after a Potential Change in Control Date, and it is
reasonably demonstrated that your termination of employment (a) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change in Control or (b) otherwise arose in connection with or in anticipation
of a Change in Control, then the "Change in Control Period" shall mean, as
applied to you, the two-year period beginning on the date immediately prior to
the date of your termination of employment.
"CODE" shall mean the Internal Revenue Code of' 1986, as
amended, and any successor provisions thereto.
"DATE OF TERMINATION" has the meaning assigned thereto in
Section 4.
25
"DISABILITY" shall mean (a) your incapacity due to physical or
mental illness which causes you to be absent from the full-time performance of
your duties with the Company for six consecutive months and (b) your failure to
return to full-time performance of your duties for the Company within 30 days
after written Notice of Termination due to Disability is given to you. Any
question as to the existence a Disability upon which you and the Company cannot
agree shall be determined by a qualified independent physician selected by you
(or, if your are unable to make such selection, such selection shall be made by
any adult member of your immediate family), and approved by the Company. The
determination of such physician made in writing to the Company and to you shall
be final and conclusive for all purposes hereunder.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and any successor provisions thereto.
"GOOD REASON" shall mean the occurrence of any of the
following during the Change in Control Period:
(a) A meaningful and detrimental alteration in your position,
titles, or nature or status of responsibilities (including reporting
responsibilities) from those in effect immediately prior to the Change
in Control Date;
(b) A reduction by the Company in your annual base salary as
in effect immediately prior to the Change in Control Date or as the
same may be increased from time to time thereafter; or a reduction in
your target annual bonus (expressed as a percentage of base salary)
below the target in effect for you prior to the Change in Control Date;
(c) The relocation of the office of the Company where you are
employed immediately prior to the Change in Control Date (the "CIC
LOCATION") to a location which is more than 25 miles away from the CIC
Location or the Company's requiring you to be based more than 25 miles
away from the CIC Location (except for required travel on the Company's
business to an extent substantially consistent with your customary
business travel obligations in the ordinary course of business prior to
the Change in Control Date);
(d) The failure by the Company to continue to provide you with
benefits at least as favorable in the aggregate to those enjoyed by you
under the Company's savings, life insurance, medical, health and
accident, disability, and fringe benefit plans and arrangements in
which you were participating immediately prior to the Change in Control
Date; or the failure by the Company to provide you with the number of
paid vacation days to which you are entitled on the basis of years of
service with the Company in accordance with the Company's normal
vacation policy in effect immediately prior to the Change in Control;
(e) The failure of the Company to obtain an agreement from any
successor to assume and agree to perform the Company's obligations
under this Agreement, as contemplated in Section 6(a) hereof,
(f) Any termination of your employment which is not effected
pursuant to the terms of this Agreement; or
(g) A material breach by the Company of the provisions of this
Agreement;
PROVIDED, HOWEVER, that an event described above in clause (a), (b), (d) or (g)
shall not constitute Good Reason unless it is communicated by you to the Company
in writing and is not corrected by the Company in a manner which
26
is reasonably satisfactory to you (including full retroactive correction with
respect to any monetary matter) within ten days of the Company's receipt of
such written notice from you.
"INVOLUNTARY TERMINATION" shall mean (a) your termination of
employment by the Company and its subsidiaries during the Change in Control
Period other than for Cause or Disability or (b) your resignation of employment
with the Company and its subsidiaries during the Change in Control Period for
Good Reason.
"NOTICE OF TERMINATION" has the meaning assigned thereto in
Section 4.
"POTENTIAL CHANGE IN CONTROL" shall mean the earliest to occur
of (a) the date on which the Company executes an agreement or letter of intent,
the consummation of the transactions described in which would result in the
occurrence of a Change in Control, (b) the date on which the Board approves a
transaction or series of transactions, the consummation of which would result in
a Change in Control, or (c) the date on which a tender offer for the Company's
voting stock is publicly announced, the completion of which would result in a
Change in Control; PROVIDED, that no such event shall be a "Potential Change in
Control" unless it is followed by a Change in Control on or prior to the first
anniversary of the Potential Change in Control Date.
"POTENTIAL CHANGE IN CONTROL DATE" shall mean the date on
which a Potential Change in Control occurs.
"REFERENCE BONUS" shall mean the greatest of (a) the average
of the three annual bonuses paid to you prior to the Date of Termination, (b)
the average of the three annual bonuses paid to you prior to the Change in
Control Date and (c) your target annual bonus under the Company's annual
incentive compensation plan for the year in which the Date of Termination
occurs. If you have been eligible to receive fewer than three bonuses prior to
such Date of Termination or the Change in Control Date, as applicable, the
amounts described in clauses (a) and (b) hereof shall be calculated using such
lesser number of annual bonuses.
"REFERENCE SALARY" shall mean the greater of (a) the annual
rate of your base salary from the Company and its subsidiaries in effect
immediately prior to the date of your Involuntary Termination and (b) the annual
rate of your base salary from the Company and its subsidiaries in effect
immediately prior to the Change in Control Date.
SECTION 7. TREATMENT OF PARACHUTE PAYMENTS. Notwithstanding
anything in this Agreement to the contrary, if any amounts due to you under this
Agreement and any other plan or program of the Company constitute a "parachute
payment" (as such term is defined in Section 28OG(b)(2) of the Code), and the
amount of the parachute payment, reduced by all federal, state, and local taxes
applicable thereto, including the excise tax imposed pursuant to Section 4999 of
the Code, is less than the amount you would receive if you were paid three times
your "base amount" (as defined Section 28OG(b)(3) of the Code, less $1.00)
reduced by all federal, state and local taxes applicable thereto, then the
aggregate of the amounts constituting the parachute payment shall be reduced to
an amount that will equal three times your base amount less $1.00. The
determination to be made with respect to this paragraph shall be made by a
national accounting firm jointly selected by the executives who have entered
into this Agreement and paid by the Company, and which may be the Company's
independent auditors. The provisions of this Section 7 may be effected only by
reducing amounts payable to you under this Agreement and not by causing you to
forego any amounts payable to you under any other Company plan, program,
arrangement or agreement.
SECTION 8. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
27
the Cornerstone Properties Inc., Tower 56, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX
00000, Attn: Secretary of the Company, or to you at the address set forth on the
first page of this Agreement or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
SECTION 9. MISCELLANEOUS.
(a) AMENDMENTS, WAIVERS, ETC. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement and this
Agreement shall supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, with respect to
the subject matter hereof, PROVIDED, HOWEVER that any employment agreement
between you and the Company shall remain in full force and effect, subject to
the last sentence of Section 1.
(b) VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
(c) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(d) NO CONTRACT OF EMPLOYMENT.Nothing in this Agreement shall
be construed as giving you any right to be retained in the employ of the Company
or shall affect the terms and conditions of your employment with the Company
prior to the commencement of the Change in Control Period.
(e) WITHHOLDING. Amounts paid to you hereunder shall be
subject to all applicable federal, state and local withholding taxes.
(f) SOURCE OF PAYMENTS. All payments provided under this
Agreement shall be paid in cash from the general funds of the Company, and no
special or separate fund shall be pal established, and no other segregation of
assets made, to assure payment. You will have no right, title or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations hereunder. To the extent that any person acquires a
right to receive payments from the Company hereunder, such night shall be no
greater than the right of an unsecured creditor of the Company.
(g) HEADINGS. The headings contained in this Agreement are
intended solely for convenience of reference and shall not affect the rights of
the parties to this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
CORNERSTONE PROPERTIES INC.
28
BY:
----------------------------------------
NAME: Xxxxxx X. Xxxxxx
TITLE: President & Chief Operating Officer
BY:
----------------------------------------
NAME: Xxxxxx X. Xxxxxx
TITLE: Chief Administrative Officer
Agreed to as of this ___ day of _______, 1998
-----------------------------------
[Employee]
29
