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EXHIBIT 10.43
BONUS AND SEVERANCE AGREEMENT
This Bonus and Severance Agreement (this "Agreement") is made and
entered into as of this 12th day of May, 1997, by and between American
Industrial Properties REIT, a Texas real estate investment trust (the "Trust")
and Xxxxx X. Xxxxxxxxx ("Executive").
RECITALS
WHEREAS, Executive is currently employed by the Trust as Vice
President and Chief Investment Officer;
WHEREAS, to encourage Executive to remain employed with the Trust, the
Trust desires to provide Executive with an opportunity for incentive bonus
compensation and certain severance compensation in the event of a Change in
Control (as defined below) of the Trust on the terms and conditions set forth
herein;
WHEREAS, the Trust and Executive each recognize and hereby acknowledge
that Executive's employment with the Trust is and shall continue to be
terminable at will, without prior notice, by either the Trust or Executive; and
WHEREAS, the Trust and Executive each hereby acknowledge that this
Agreement is not intended to be, and shall not be construed as, an express or
implied contract of employment between the Trust and Executive;
NOW, THEREFORE, for and in consideration of the mutual promises
hereinafter contained and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties hereto, the
Trust and Executive hereby agree as follows:
AGREEMENTS
1. TERMINATION FOLLOWING A CHANGE IN CONTROL. (a) In the event of
the occurrence of a Change in Control, the Executive's employment may be
terminated by the Trust during the Severance Period (as defined below) without
the Executive becoming entitled to the benefits provided by Section 2 only upon
the occurrence of: (i) the Executive's death; or (ii) Cause (as defined below).
If the Executive's employment is terminated by the Trust during the Severance
Period, other than pursuant to Section 1(a)(i), or 1(a)(ii), the Executive will
be entitled to the benefits provided by Section 2.
(b) On or after the occurrence during the Severance Period of one or
more of the following events (regardless of whether any other reason, other
than Cause as hereinabove provided, for termination exists or has occurred,
including without limitation the Executive's acceptance and/or commencement of
other employment), the Executive may terminate his employment with the Trust
and become entitled to the benefits provided by Section 2:
(i) failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially equivalent office
or position, of or with the Trust which the Executive held immediately prior to
a Change in Control, or the removal of the Executive as a Trust Manager of the
Trust (or any successor thereto) if the Executive had been a Trust Manager of
the Trust immediately prior to the Change in Control;
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(ii) a significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties attached to the
position with the Trust which the Executive held immediately prior to the
Change in Control, a reduction in the aggregate of the Executive's base pay and
incentive pay received from the Trust, or the termination or denial of the
Executive's rights to Employee Benefits (as defined below) or a reduction in
the scope or value thereof, except for any such termination or denial, or
reduction in the scope of value, of any Employee Benefits applicable generally
to all recipients of or participants in such Employee Benefits;
(iii) the determination by the Executive (which determination
will be conclusive and binding upon the parties hereto provided it has been
made in good faith and in all events will be presumed to have been made in good
faith unless otherwise shown by the Trust by clear and convincing evidence)
that a change in circumstances has occurred following a Change in Control,
including without limitation a change in the scope of the business or other
activities for which the Executive was responsible immediately prior to the
Change in Control, which has rendered the Executive substantially unable aid
carry out, has substantially hindered the Executive's performance of, or has
caused the Executive to suffer a substantial reduction in, any of the
authorities, powers, functions, responsibilities, or duties attached to the
position held by the Executive immediately prior to the Change in Control,
which situation is not remedied within five calendar days after written notice
to the Trust from the Executive of such determination;
(iv) the liquidation, dissolution, merger, consolidation, or
reorganization of the Trust or transfer of all or substantially all of its
business and/or assets, unless the successor or successors (by liquidation,
merger, consolidation, reorganization, transfer or otherwise) to which all or
substantially all of the Trust's business and/or assets have been transferred
(directly or by operation of law) assumes all duties and obligations of the
Trust under this Agreement;
(v) the Trust relocates its principal executive offices, or
requires the Executive to have the Executive's principal location of work
changed, to any location which is in excess of 25 miles from the location
thereof immediately prior to the Change in Control, or requires the Executive
to travel away from the Executive's office in the course of discharging the
Executive's responsibilities or duties hereunder at least 20% more (in terms of
aggregate days in any calendar year or in any calendar quarter when annualized
for purposes of comparison to any prior year) than was required of the
Executive in any of the three full years immediately prior to the Change in
Control without, in either case, the Executive's prior written consent; and/or
(vi) without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Trust or any successor
thereto.
(c) A termination by the Trust pursuant to Section 1(a) or by the
Executive pursuant to Section 1(b) will not affect any rights which the
Executive may have pursuant to any other agreement, policy, plan, program or
arrangement of the Trust providing Employee Benefits (except as provided in
Section 1(a)), which rights will be governed by the terms thereof.
2. SEVERANCE BENEFITS. (a) If, following the occurrence of a Change
in Control, the Trust terminates the Executive's employment during the
Severance Period other than pursuant to Section 1(a), or if the Executive
terminates the Executive's employment pursuant to Section 1(b), the Trust will
pay to the Executive the Severance Benefit (as defined below) in immediately
available funds, in United States Dollars, within five business days after the
Termination Date. In addition, for the remainder of the Severance Period, but
in no event for less
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than one year, the Trust will arrange to provide the Executive Employee
Benefits that are welfare benefits (but not stock option, stock purchase, stock
appreciation, or similar compensatory benefits) substantially similar to those
which the Executive was receiving or entitled to receive immediately prior to
the Termination Date (or, if greater, immediately prior to the reduction,
termination, or denial described in Section 1(b)(ii)), except that the level of
any such Employee Benefits to be provided to the Executive may be reduced in
the event of a corresponding reduction applicable generally to all recipients
of or participants in such Employee Benefits, and the Severance Period will be
considered service with the Trust for the purpose of determining service
credits and benefits due and payable to the Executive under the Trust's
retirement income, supplemental executive retirement, and other benefit plans
of the Trust applicable to the Executive, the Executive's dependents, or the
Executive's beneficiaries immediately prior to the Termination Date. If and to
the extent that any benefit described in the immediately preceding sentence is
not or cannot be paid or provided under any policy, plan, program or
arrangement of the Trust then the Trust will itself pay or provide for the
payment of such Employee Benefits to the Executive, and, if applicable, the
Executive's dependents and beneficiaries. Without otherwise limiting the
purposes or effect of Section 3, Employee Benefits otherwise receivable by the
Executive pursuant to this Section 2(a) will be reduced to the extent
comparable welfare benefits are actually received by the Executive from another
employer during the Severance Period following the Executive's termination
date.
(b) The Trust shall have a right of set-off in respect of any claim,
debt or obligation against any payment to or benefit for the Executive provided
for in this Agreement.
(c) Notwithstanding any other provision hereof, the parties'
respective rights and obligations under this Section 2 and under Section 5 will
survive any termination or expiration of this Agreement following a Change in
Control or the termination of the Executive's employment following a Change in
Control for any reason whatsoever.
3. MITIGATION OBLIGATION. Executive will be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment and any profits, income, earnings or other benefits from any source
whatsoever shall serve as a reduction in the amount of payments to be made by
the Trust hereunder.
4. CERTAIN ADDITIONAL PAYMENTS BY THE TRUST. (a) Notwithstanding
anything in this Agreement to the contrary, in the event it is determined (as
hereafter provided) that any payment or distribution by the Trust to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant aid 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, the lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (any such payment or distribution, a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (or any successor
provision thereto), by reason of being considered "contingent on a change in
ownership or control" of the Trust, within the meaning of Section 280G of the
Code (or any successor provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with respect to such tax (such
tax or taxes, together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment or payments (collectively, a
"Gross-Up Payment"); provided, however, that no Gross-up Payment will be made
with respect to the Excise Tax, if any, attributable to (A) any incentive stock
option ("ISO") granted prior to the execution of this Agreement or (B) any
stock appreciation or similar right, whether or not limited, granted in tandem
with any ISO described in clause (A) of this sentence. The Gross-Up Payment
will be in an amount such that, after payment by the Executive of all taxes
(including any interest or
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penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive will have received an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 4(f), all determinations
required to be made under this Section 4, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Trust to the Executive and the
amount of such Gross-Up Payment, if any, will be made by a nationally
recognized accounting firm (the "Accounting Firm") selected by the Executive in
the Executive's sole discretion. The Executive will direct the Accounting Firm
to submit its determination and detailed supporting calculations to both the
Trust and the Executive within 30 calendar days after the Executive's
termination date, and any such other time or times as may be requested by the
Trust or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Trust will pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations with respect to any Payment to the Executive. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
will, at the same time as it makes such determination, furnish the Trust and
the Executive an opinion that the Executive has substantial authority not to
report any Excise Tax on the Executive's federal, state, or local income or
other tax return. As a result of the uncertainty in the application of Section
4999 of the Code (or any successor provision thereto) and the possibility of
similar uncertainty regarding applicable state or local tax law at the time of
any determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Trust should have been
made (an "Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Trust exhausts or fails to pursue its remedies
pursuant to Section 9(f) and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive will direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Trust and the
Executive as promptly as possible. Any such Underpayment will be promptly paid
by the Trust to, or for the benefit of, the Executive within five business days
after receipt of such determination and calculations.
(c) The Trust and the Executive will each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Trust or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Section 4(b). Any determination by the Accounting Firm as to
the amount of the Gross-Up Payment will be binding upon the Trust and the
Executive.
(d) The federal, state and local income or other tax returns filed by
the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Payment and, at the request of the Trust, provided to the Trust true and
correct copies (with any amendments) of the Executive's federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Trust, evidencing such
payment. If prior to the filing of the Executive's federal income tax return,
or corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive will within five business days pay to the Trust the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section
4(b) will be borne by the Trust. If such fees and expenses are initially paid
by the Executive, the Trust will reimburse the Executive
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the full amount of such fees and expenses within five business days after
receipt from the Executive of a statement therefor and reasonable evidence of
the Executive's payment thereof.
(f) The Executive will notify the Trust in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Trust of a Gross-Up Payment. Such notification
will be given as promptly as practicable but no later than 10 business days
after the Executive actually receives notice of such claim and the Executive
will further apprise the Trust of the nature of such claim and the date on
which such claim is requested to be paid (in each case, to the extent known by
the Executive). The Executive will not pay such claim prior to the earlier of
(i) the expiration of the 30-calendar day period following the date on which
the Executive gives such notice to the Trust and (ii) the date that any payment
of amount with respect to such claim is due. If the Trust notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive will:
(A) provide the Trust with any written records or documents
in the Executive's possession relating to such claim reasonably requested by
the Trust;
(B) take such action in connection with contesting such claim
as the Trust may reasonably request in writing from time to time, including
without limitation accepting legal representation with respect to such claim by
an attorney competent in respect of the subject matter and reasonably selected
by the Trust;
(C) cooperate with the Trust in good faith in order effectively
to contest such claim; and
(D) permit the Trust to participate in any proceedings relating
to such claims;
provided, however, that the Trust will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section 4(f), the Trust will control all proceedings taken in connection
with the contest of any claim contemplated by this Section 4(f) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Executive may participate therein at
the Executive's own cost and expense) and may, at its 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 will 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 Trust may determine;
provided, however, that if the Trust directs the Executive to pay the tax
claimed and xxx for a refund, the Trust will advance the amount of such payment
to the Executive on an interest-free basis and will indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income or
other tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which the contested amount is claimed to be due
is limited solely to such contested amount. The Trust's control of any such
contested claim will be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive will 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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(g) If, after the receipt by the Executive of an amount advanced by
the Trust pursuant to Section 4(f), the Executive receives any refund with
respect to such claim, the Executive will (subject to the Trust's complying
with the requirements of Section 4(f)) pay to the Trust the amount of such
refund (together with any interest paid or credited thereon after any taxes
applicable thereto) within 30 calendar days after such receipt and the Trust's
satisfaction of all accrued obligations under this Agreement. If, after the
receipt by the Executive of any amount advanced by the Trust pursuant to
Section 4(f), a determination is made that the Executive will not be entitled
to any refund with respect to such claim and the Trust does not notify the
Executive in writing of its intent to contest such determination prior to the
expiration of 30 calendar days after such determination, then such advance will
be forgiven and will not be required to be repaid and the amount of any such
advance will offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Trust to the Executive pursuant to this Section 4.
5. LEGAL FEES AND EXPENSES; SECURITY. It is the intent of the Trust
that the Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of the Executive's
rights to compensation upon a Change in Control by litigation or otherwise
because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Executive hereunder. Accordingly, if it
should appear to the Executive that the Trust has failed to comply with any of
its obligations under this Agreement or in the event that the Trust or any
other person takes or threatens to take any action to declare the agreement to
pay Executive compensation upon a Change in Control void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Trust irrevocably authorizes the Executive from
time to time to retain counsel of the Executive's choice, at the expense of the
Trust as hereinafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Trust or any Trust Manager, officer,
stockholder, or other person affiliated with the Trust, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Trust and such counsel, the Trust irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Trust and the Executive agree that a confidential relationship
will exist between the Executive and such counsel. Without regard to whether
the Executive prevails, in whole or in part, in connection with any of the
foregoing, the Trust will pay and be solely financially responsible for any and
all attorneys' and related fees and expenses incurred by the Executive in
connection with any of the foregoing.
6. EMPLOYMENT RIGHTS; TERMINATION PRIOR TO CHANGE IN CONTROL.
Nothing expressed or implied in this Agreement will create any right or duty on
the part of the Trust or the Executive to have the Executive remain in the
employ of the Trust prior to or following any Change in Control. Any
termination of the employment of the Executive or the removal of the Executive
from any office or position in the Trust following the commencement of any
discussion with a third person that results in a Change in Control within 180
calendar days after such termination or removal will be deemed to be a
termination or removal of the Executive after a Change in Control for purposes
of this Agreement.
7. CERTAIN DEFINED TERMS. In addition to terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
(a) "Change in Control" means the occurrence during the term
of this Agreement of any of the following events:
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(i) the Trust is merged, consolidated, or reorganized into or
with another corporation or other legal entity, 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 entity
immediately after such transaction are held in the aggregate by the holders of
the then-outstanding securities entitled to vote generally in the election of
Trust Managers of the Trust (the "Voting Stock") immediately prior to such
transaction;
(ii) the Trust sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal entity
and, as a result of such sale or transfer, less than a majority of the combined
voting power of the then-outstanding securities of such other corporation or
entity immediately after such sale or transfer is held in the aggregate by the
holders of Voting Stock of the Trust immediately prior to such sale or
transfer;
(iii) there is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report or item therein), each as
promulgated pursuant to the Securities Exchange Act of 1934, as amended (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
securities representing over 9.8% of the combined voting power of the Voting
Stock of the Trust or could become the owner of over 9.8% of the Trust s Common
Shares of Beneficial Interest through the conversion of the Trust s debt or
equity securities;
(iv) the Trust 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 Trust has occurred or will
occur in the future pursuant to any then-existing contract or transaction; or
(v) if, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the Trust
Managers of the Trust cease for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this clause (v), each Trust
Manager who is first elected, or first nominated for election by the Trust's
shareholders, by a vote of at least two-thirds of the Trust Managers of the
Trust (or a committee thereof) then still in office who were Trust Managers of
the Trust at the beginning of any such period will be deemed to have been a
Trust Manager of the Trust at the beginning of such period.
Notwithstanding the foregoing provisions of Section 13(a)(iii) or 13(a)(iv),
unless otherwise determined in a specific case by majority vote of the Board of
Trust Managers of the Trust, a "Change in Control" will not be deemed to have
occurred for purposes of Section 13(a)(iii) or 13(a)(iv) solely because (A) the
Trust, (B) an entity in which the Trust, directly or indirectly, beneficially
owns 50% or more of the voting securities (a "Subsidiary"), or (C) any employee
stock ownership plan or any other employee benefit plan of the Trust or any
Subsidiary 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
Stock, whether in excess of 9.8% or otherwise, or because the Trust reports
that a change in control of the Trust has occurred or will occur in the future
by reason of such beneficial ownership.
(b) "Cause" means the following grounds for termination: (i) any act
by Executive of fraud or sexual harassment with respect to any aspect of the
Trust's business; (ii) drug or alcohol
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abuse or behavior that impedes Executive's job performance; (iii) failure by
Executive to perform hereunder after notice of such failure and explanation of
such failure of performance, which is reasonably determined by the Board of
Trust Managers to be materially injurious to the business or interests of the
Trust; (iv) misappropriation of funds or any corporate opportunity; or (v)
conviction of Executive of a crime of moral turpitude (or a plea of nolo
contendere thereto).
(c) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement income
and welfare benefit policies, plans, programs or arrangements in which the
Executive is entitled to participate, including without limitation any stock
option, stock purchase, stock appreciation, savings, pension, supplemental
executive retirement or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health,
medical/hospital, or other insurance (whether funded by actual insurance or
self-insured by the Trust), disability, salary continuation, expense
reimbursement, and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Trust, providing
perquisites, benefits and service credit for benefits at least as great in the
aggregate as are payable thereunder prior to a Change in Control.
(d) If Executive becomes entitled to Severance Benefits within one
year from the date of the Change in Control, the term "Severance Benefit" shall
mean an amount equal to one times (i) the Executive's annualized base salary
rate as of the date of the first event constituting a Change in Control or, if
higher, (ii) the Executive's highest base salary received for any year in the
three full calendar years immediately preceding the first event constituting a
Change in Control.
(e) "Severance Period" means the period of time commencing on the
date of an occurrence of each Change in Control and continuing until the
earliest of (i) the expiration of one year after each occurrence of an event
constituting a Change in Control, (ii) the Executive's death, or (iii) the
Executive's attainment of age 65.
8. BONUS COMPENSATION. The Trust shall pay Executive an annual
incentive bonus (the "annual incentive bonus") for each calendar year during
the term or any renewal of this Agreement, subject to certain conditions. Such
annual incentive bonus, if any, shall be payable to Executive within 30 days
after the end of each calendar year or as soon as practicable thereafter during
the term or any renewal of this Agreement. Each such annual incentive bonus
shall be calculated based upon a formula as set forth by the Compensation
Committee of the Trust for each calendar year for which an incentive bonus is
calculated. The formula shall be established by the Compensation Committee as
soon as practicable after the business plan for the next year is presented to
the Board of Trust Managers, but by no later than December 31 of each year.
9. PAYMENT OF BONUS COMPENSATION. The Trust and Executive each
hereby acknowledge that the employment of Executive is terminable at the will
of either the Trust or Executive without notice to the other for any reason
whatsoever or no reason, and that this Agreement and the bonus compensation
provided for herein is not intended to and shall not create a presumption of an
employment contract or constitute an express or implied contract of employment
between the Trust and Executive. Accordingly, Executive acknowledges and agrees
that except as specifically set forth in this Agreement, in the event of the
expiration of this Agreement or the expiration of any renewal hereof, Executive
shall not be entitled to receive, and the Trust shall not be obligated to pay
to Executive, any further bonus compensation; provided, however, that in the
event Executive's employment is terminated for any reason prior to the
expiration of this Agreement or any renewal hereof, Executive shall be entitled
to receive any
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previously unpaid bonus payable to Executive pursuant to Section 8 hereof for
each calendar year during the term of this Agreement, and including the
calendar year in which such termination occurs, prorated for the portion of
such year which elapsed prior to the date such termination becomes effective.
Any and all such payments shall be subject to deduction and withholding
authorized or required by applicable law.
10. ADDITIONAL BENEFITS. Nothing in this Agreement shall be deemed to
render Executive ineligible to (i) participate in any employee benefit plan of
the Trust, including, but not limited to, any stock option plan of the Trust,
or (ii) receive additional cash or stock or other type of bonuses from the
Trust.
11. TERM. The term of this Agreement shall be deemed to commence and
be effective as of the date of this Agreement and shall continue for a two-year
term to and including May 12, 1999, unless earlier terminated in accordance
with the provisions hereof. At any time within sixty days of the end of such
term or any renewal term, the parties hereto may renew this Agreement in
writing for additional terms of one year.
12. TERMINATION. Except with respect to the provisions of this
Agreement that provide for payments to be made to Executive after termination
of employment, this Agreement shall terminate automatically without further
action by either of the parties hereto upon the death or permanent disability
of Executive or the termination of Executive's employment with the Trust for
any reason or no reason, in accordance with Executive's status as an employee
at will. As used herein, the term "permanent disability" means physical or
mental disability or both that is determined by the Trust, in its sole
discretion, to substantially impair the ability of Executive to perform the
day-to-day functions normally performed by Executive if the disability is
suffered (or is reasonably expected to be suffered) by Executive for a period
of not less than six consecutive calendar months. Notwithstanding the
foregoing, Executive (or his estate, heirs or personal representatives, as
applicable) shall be entitled to receive accrued bonus compensation as set
forth in Section 9 hereof, but shall not be entitled to severance compensation
except to the extent that a Change in Control of the Trust occurs 179 days or
less prior to the termination of this Agreement.
13. REPRESENTATION BY EXECUTIVE. Executive hereby represents and
warrants to the Trust that there are no agreements or understandings that would
make unlawful his execution or delivery of this Agreement.
14. NOTICES. All notices, renewals and other communications required
or permitted under this Agreement must be in writing and shall be deemed to
have been given if delivered or mailed, by certified mail, first class postage
prepaid, to the parties at the addresses set forth in this Agreement, as the
same may be changed in writing by the parties from time to time.
15. ENTIRE AGREEMENT. The parties expressly agree that this Agreement
is contractual in nature and not a mere recital, and that it contains all the
terms and conditions of the agreement between the parties with respect to the
matters set forth herein. All prior negotiations, agreements, arrangements,
understandings and statements between the parties relating to the matters set
forth herein that have occurred at any time or contemporaneously with the
execution of this Agreement are superseded and merged into this completely
integrated Agreement. The Recitals set forth above shall be deemed to be part
of this Agreement.
16. GOVERNING LAW. This Agreement was negotiated and is
performable in Dallas County, Texas and shall be governed by the laws of the
State of Texas without giving effect to principles of conflicts of law.
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17. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom, and in lieu of
such provision, there shall be added automatically as a part of this Agreement,
a legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible, and the Trust and
Executive hereby request the court or any arbitrator to whom disputes relating
to this Agreement are submitted to reform the otherwise unenforceable covenant
in accordance with the proceeding provision.
18. COUNTERPARTS. This Agreement may be executed in multiple
identical counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute but one and the same instrument. In
making proof of this Agreement, it shall not be necessary to produce or account
for more than one counterpart executed by the party sought to be charged with
performance hereunder.
19. ASSIGNMENT AND DELEGATION. All rights, covenants and agreements
of the Trust set forth in this Agreement shall, unless otherwise provided
herein, be binding upon and inure to the benefit of the Trust's respective
successors and assigns. All rights, covenants and agreements of Executive set
forth in this Agreement shall, unless otherwise provided herein, not be
assignable by Executive, and shall be considered personal to Executive for all
purposes.
20. SPECIAL AGREEMENT. Notwithstanding any of the foregoing
provisions, it is hereby expressly understood and agreed that if employment of
Executive is terminated by the Trust on or before May 12, 1998 for any reason
other than Cause as defined in Section 7(b) of this Agreement, Executive will
be paid the Severance Benefit as defined in Section 7(d) of this Agreement.
AMERICAN INDUSTRIAL PROPERTIES REIT
-------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
Notice Address: 0000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
EXECUTIVE:
-------------------------------------
Xxxxx X. Xxxxxxxxx
Notice Address: 0000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
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