CHANGE OF CONTROL EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 12th day of May, 2003 (this "Agreement"), by and
between Taubman Centers Inc., a Michigan corporation (together with its
successors, "Taubman"), Taubman Realty Group Limited Partnership, a Delaware
limited partnership ("TRG") and Xxxx X. Xxxxx (the "Executive").
WHEREAS, the Board of Directors of Taubman (the "Board"), has
determined that it is in the best interests of Taubman and its stockholders to
assure that the Company (as defined below) will have the continued dedication of
the Executive, notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined herein). The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the current
Company and in the event of any threatened or pending Change of Control, and to
provide the Executive with compensation and benefits arrangements upon a Change
of Control that ensure that the compensation and benefits expectations of the
Executive will be satisfied and that are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused Taubman to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. CERTAIN DEFINITIONS. (a) "Effective Date" means the
first date during the Coverage Period (as defined herein) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment
(1) was at the request of a third party that has taken steps reasonably
calculated to effect a Change of Control or (2) otherwise arose in connection
with or anticipation of a Change of Control, then "Effective Date" means the
date immediately prior to the date of such termination of employment.
(b) "Coverage Period" means the period commencing on the date
hereof and ending on the third anniversary of the date hereof; provided,
however, that, commencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each annual anniversary
thereof, the "Renewal Date"), unless previously terminated, the Coverage Period
shall be automatically extended so as to terminate three years from such Renewal
Date, unless, at least 60 days prior to the Renewal Date, Taubman shall give
notice to the Executive that the Coverage Period shall not be so extended.
(c) "Affiliated Company" means any company controlled by,
controlling or under common control with Taubman.
(d) "Change of Control" means the first to occur of any of
the following events:
(1) The acquisition 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")) other than an Existing Shareholder (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 33% or more of either (A) the then-outstanding shares
of common stock of Taubman (the "Outstanding Taubman Common Stock") or (B) the
combined voting power of the then-outstanding voting securities of Taubman
entitled to vote generally in the election of directors (the "Outstanding
Taubman Voting Securities"); provided, however, that, for purposes of this
Section 1(d), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from Taubman, (ii) any acquisition by
Taubman, (iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Taubman or any Affiliated Company or (iv) any
acquisition by any corporation pursuant to a transaction that complies with
Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C);
(2) Any time at which individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by Taubman's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, 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;
(3) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving Taubman or
any of its subsidiaries, a sale or other disposition of all or substantially all
of the assets of Taubman, or the acquisition of assets or stock of another
entity by Taubman or any of its subsidiaries (each, a "Business Combination"),
in each case unless, following such Business Combination, (A) all or
substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Taubman Common Stock and the Outstanding Taubman
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of 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, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that, as a result of such
transaction, owns Taubman or all or substantially all of Taubman's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Business Combination of
the Outstanding Taubman Common Stock and the Outstanding Taubman Voting
Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of Taubman or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 33% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the Board
providing for such Business Combination;
(4) Approval by the stockholders of Taubman of a complete
liquidation or dissolution of Taubman; or
(5) Termination, non-renewal, material amendment or material
modification of the Master Services Agreement between TRG and The Taubman
Company LLC dated as of November 30, 1992, as amended through the date hereof or
the Corporate Services Agreement between the Taubman and the Taubman Company LLC
dated as of November 30, 1992, as amended through the date hereof, other than
any such termination, non-renewal, amendment or modification which has been
previously approved by a majority of the Independent Directors (as defined in
Taubman's Restated Articles of Incorporation) serving on the Incumbent Board.
(e) "Company" means Taubman and the Affiliated Companies.
(f) "Existing Shareholder" means A. Xxxxxx Xxxxxxx or any of his
issue or any of his or their respective descendants, heirs, beneficiaries or
donees or any trust, corporation, partnership, limited liability company or
other entity if substantially all of the economic interests in such entity are
held by or for the benefit of such persons.
SECTION 2. EMPLOYMENT PERIOD. Taubman hereby agrees to continue,
or to cause one of the Affiliated Companies to continue, the Executive in its
employ, subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary of the
Effective Date (the "Employment Period"). The Employment Period shall terminate
upon the Executive's termination of employment for any reason.
SECTION 3. TERMS OF EMPLOYMENT. (a) Position and Duties. (1)
During the Employment Period, (A) the Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the office where the Executive was
employed immediately preceding the Effective Date or at any other location less
than 35 miles from such office.
(2) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) COMPENSATION. (1) BASE SALARY. During the Employment Period,
the Executive shall receive an annual base salary (the "Annual Base Salary") at
an annual rate at least equal to 12 times the highest monthly base salary paid
or payable, including any base salary that has been earned but deferred, to the
Executive by the Company in respect of the 12-month period immediately preceding
the month in which the Effective Date occurs. The Annual Base Salary shall be
paid at such intervals as the Company pays executive salaries generally. During
the Employment Period, the Annual Base Salary shall be reviewed for increase,
but not decrease, at least annually, beginning no more than 12 months after the
last salary increase awarded to the Executive prior to the Effective Date. Any
increase in the Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Annual Base Salary shall
not be reduced after any such increase and the term "Annual Base Salary" shall
refer to the Annual Base Salary as so increased.
(2) ANNUAL BONUS. In addition to the Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
Executive's highest bonus earned under the Company's Annual Incentive Plans, or
any comparable bonus under any predecessor or successor plan, for the last three
full fiscal years prior to the Effective Date (or for such lesser number of full
fiscal years prior to the Effective Date for which the Executive was eligible to
earn such a bonus, and annualized in the case of any bonus earned for a partial
fiscal year) (the "Recent Annual Bonus"). (If the Executive has not been
eligible to earn such a bonus for any period prior to the Effective Date, the
"Recent Annual Bonus" shall mean the Executive's target annual bonus for the
year in which the Effective Date occurs.) Each such Annual Bonus shall be paid
no later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(3) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Employment Period, the Executive shall be entitled to participate in all cash
incentive, equity incentive, savings and retirement plans, practices, policies,
and programs applicable generally to other peer executives of the Company, but
in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company. Notwithstanding any provision in any plan
or award agreement to the contrary, effective as of the Effective Date, each and
every stock option, restricted stock award, restricted stock unit award and
other equity-based award held by the Executive that is outstanding as of the
Change of Control shall immediately vest and become exercisable, and each
compensation award (as defined in the Long-Term Performance Compensation Plan
(the "LTPC Plan")) granted under the LTPC Plan outstanding as of the Change of
Control shall vest and become immediately payable in full (along with any
Premium (as defined in the LTPC Plan) thereon, if the FFO Per Share Growth Rate
(as defined in the LTPC Plan) for the three full calendar years preceding the
date of the Change of Control equals or exceeds 10%).
(4) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, employee life, group
life, accidental death and travel accident insurance plans and programs) to the
extent applicable generally to other peer executives of the Company, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits that are less favorable, in the aggregate, than the most favorable
of such plans, practices, policies and programs in effect for the Executive at
any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company.
(5) EXPENSES. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company.
(6) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company in effect for
the Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company.
(7) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of the Company.
(8) VACATION. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company as in effect for the Executive
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company.
SECTION 4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY.
The Executive's employment shall terminate automatically if the Executive dies
during the Employment Period. If Taubman determines in good faith that the
Disability (as defined herein) of the Executive has occurred during the
Employment Period (pursuant to the definition of "Disability"), it may give to
the Executive written notice in accordance with Section 11(b) of its intention
to terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive
(the "Disability Effective Date"), provided that, within the 30
days after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. "Disability" means the absence of the
Executive from the Executive's duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to mental or
physical illness that is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) CAUSE. Taubman may terminate the Executive's employment
during the Employment Period with or without Cause. "Cause" means:
(1) the willful and continued failure of the Executive to
perform substantially the Executive's duties (as contemplated by
Section 3(a)(1)(A)) with the Company (other than any such failure
resulting from incapacity due to physical or mental illness or
following the Executive's delivery of a Notice of Termination for Good
Reason), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive Officer
of Taubman that specifically identifies the manner in which the Board
or the Chief Executive Officer of Taubman believes that the Executive
has not substantially performed the Executive's duties, or
(2) the willful engaging by the Executive in illegal conduct or
gross misconduct that is materially and demonstrably injurious to the
Company.
For purposes of this Section 4(b), no act, or failure to act, on the part of the
Executive shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer of
Taubman or a senior officer of Taubman or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for Cause
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 three-quarters
of the entire membership of the Board (excluding the Executive, if the Executive
is a member of the Board) at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive
is given an opportunity, together with counsel for the Executive, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in Section 4(b)(1) or 4(b)(2), and
specifying the particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated
by the Executive for Good Reason or by the Executive voluntarily without Good
Reason. "Good Reason" means:
(1) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a), or any other
diminution in such position, authority, duties or responsibilities
(whether or not occurring solely
as a result of Taubman's ceasing to be a publicly traded entity),
excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(2) any failure by the Company to comply with any of the
provisions of Section 3(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and that is remedied by
the Company promptly after receipt of notice thereof given by the
Executive;
(3) the Company's requiring the Executive (i) to be based at any
office or location other than as provided in Section 3(a)(1)(B), (ii)
to be based at a location other than the principal executive offices of
the Company if the Executive was employed at such location immediately
preceding the Effective Date, or (iii) to travel on Company business to
a substantially greater extent than required immediately prior to the
Effective Date;
(4) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(5) any failure by Taubman to comply with and satisfy Section
10(c).
For purposes of this Section 4(c), any good faith determination of Good Reason
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason pursuant
to a Notice of Termination given during the 90-day period immediately following
the Effective Date (a "Window Period Termination") shall be deemed to be a
termination for Good Reason for all purposes of this Agreement. The Executive's
mental or physical incapacity following the occurrence of an event described
above in clauses (1) through (5) shall not affect the Executive's ability to
terminate employment for Good Reason.
(d) NOTICE OF TERMINATION. Any termination by Taubman for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b).
"Notice of Termination" means a written notice that (1) indicates the specific
termination provision in this Agreement relied upon, (2) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, and (3) if the Date of Termination (as defined herein)
is other than the date of receipt of such notice, specifies the Date of
Termination (which Date of Termination shall be not more than 30 days after the
giving of such notice). The failure by the Executive or Taubman to set forth in
the Notice of Termination any fact or circumstance that contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive or Taubman,
respectively, hereunder or preclude the Executive or Taubman , respectively,
from asserting such fact or circumstance in enforcing the Executive's or
Taubman's respective rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (1) if the
Executive's employment is terminated by Taubman for Cause, or by the Executive
for Good Reason, the date of receipt of the Notice of Termination or any later
date specified in the Notice of Termination,
(which date shall not be more than 30 days after the giving of such notice), as
the case may be, (2) if the Executive's employment is terminated by Taubman
other than for Cause or Disability, the date on which the Company notifies the
Executive of such termination, and (3) if the Executive resigns without Good
Reason, the date on which the Executive notifies the Company of such
termination, and (4) if the Executive's employment is terminated by reason of
death or Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a)
GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the
Employment Period, Taubman terminates the Executive's employment other than for
Cause or Disability or the Executive terminates employment for Good Reason:
(1) Taubman shall pay, or shall cause one of the Affiliated
Company to pay, to the Executive, in a lump sum in cash within 30 days
after the Date of Termination, the aggregate of the following amounts:
(A) the sum of (i) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid; (ii) the Executive's business expenses that are
reimbursable pursuant to Section 3(b)(5) but have not been
reimbursed by the Company as of the Date of Termination; (iii)
the Executive's Annual Bonus for the fiscal year immediately
preceding the fiscal year in which the Date of Termination
occurs if such bonus has been determined but not paid as of
the Date of Termination; (iv) the product of (x) the higher of
(I) the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof that has been
earned but deferred (and annualized for any fiscal year
consisting of less than 12 full months or during which the
Executive was employed for less than 12 full months), for the
most recently completed fiscal year during the Employment
Period, if any (such higher amount, the "Highest Annual
Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of
Termination and the denominator of which is 365; and (v) any
compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case, to the extent not theretofore paid
(the sum of the amounts described in subclauses (i), (ii),
(iii), (iv) and (v), the "Accrued Obligations");
(B) the amount equal to the product of (i) in the case
of a Window Period Termination, two, and in all other cases,
two and a half and (ii) the sum of (x) the Executive's Annual
Base Salary and (y) the Highest Annual Bonus; and
(2) other than in the event of a Window Period Termination, for
30 months after the Executive's Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to those that
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 3(b)(4) and
Section 3(b)(6) if the Executive's employment had not been terminated
or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and their families; provided, however, that, if the Executive becomes
reemployed
with another employer and is eligible to receive such benefits under
another employer provided plan, the medical and other welfare benefits
described herein shall terminate. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have
remained employed until three years after the Date of Termination and
to have retired on the last day of such period;
(3) other than in the event of a Window Period Termination,
Taubman shall provide, or shall cause one of the Affiliated Companies
to provide, the Executive with outplacement benefits through the
services of an independent outplacement consulting firm selected by
Taubman during the 12-month period following the Date of Termination;
and
(4) to the extent not theretofore paid or provided, Taubman
shall timely pay or provide, or shall cause one of the Affiliated
Companies to timely pay or provide, to the Executive any Other Benefits
(as defined in Section 6).
(b) DEATH. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, Taubman shall provide, or
shall cause one of the Affiliated Companies to provide, the Executive's estate
or beneficiaries with the Accrued Obligations and the timely payment or delivery
of the Other Benefits, and shall have no other severance obligations under this
Agreement. The Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of the Other Benefits, the term
"Other Benefits" as utilized in this Section 5(b) shall include, without
limitation, and the Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the
Company to the estates and beneficiaries of peer executives of the Company under
such plans, programs, practices and policies relating to death benefits, if any,
as in effect with respect to other peer executives and their beneficiaries at
any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's death with respect to
other peer executives of the Company and their beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated by
Taubman by reason of the Executive's Disability during the Employment Period,
Taubman shall provide, or shall cause one of the Affiliated Companies to
provide, the Executive with the Accrued Obligations and the timely payment or
delivery of the Other Benefits, and shall have no other severance obligations
under this Agreement. The Accrued Obligations shall be paid to the Executive in
a lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of the Other Benefits, the term "Other Benefits" as utilized in
this Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of the Company
and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment is terminated by Taubman for Cause during the Employment Period,
Taubman shall provide to the Executive, or shall cause one of the Affiliated
Companies to provide to Executive, (1) the Executive's Annual Base Salary
through the Date of Termination, (2) the amount of any compensation previously
deferred by the Executive, and (3) the Other Benefits, in each case, to the
extent theretofore unpaid, and shall have no other severance obligations under
this Agreement. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, Taubman shall
provide to the Executive, or shall cause one of the Affiliated Companies to
provide to the Executive, the Accrued Obligations and the timely payment or
delivery of the Other Benefits, and shall have no other severance obligations
under this Agreement. In such case, all the Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination.
SECTION 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company and for which the
Executive may qualify, nor, subject to Section 11(f), shall anything herein
limit or otherwise affect such rights as the Executive may have under any other
contract or agreement with the Company. Amounts that are vested benefits or that
the Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any other contract or agreement with Taubman or any of the
Affiliated Companies at or subsequent to the Date of Termination ("Other
Benefits") shall be payable in accordance with such plan, policy, practice or
program or contract or agreement, except as explicitly modified by this
Agreement. Notwithstanding the foregoing, if the Executive receives payments and
benefits pursuant to Section 5(a) of this Agreement, the Executive shall not be
entitled to any severance pay or benefits under any severance plan, program or
policy of the Company, unless otherwise specifically provided therein in a
specific reference to this Agreement.
SECTION 7. FULL SETTLEMENT. Taubman's obligation to make or
cause one of the Affiliated Companies to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense, or other claim,
right or action that the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement, and such amounts shall not be reduced
whether or not the Executive obtains other employment. Taubman shall pay, or
cause one of the Affiliated Companies to pay, as incurred (within 15 days
following Taubman's receipt of an invoice from the Executive), to the full
extent permitted by law, all legal fees and expenses that the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by Taubman, any of the Affiliated Companies, the Executive or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").
SECTION 8. REDUCTION OF PAYMENTS.
(a) For purposes of this Section 8: (i) a "Payment" shall mean
any payment or distribution in the nature of compensation to or for the benefit
of the Executive, whether paid or payable pursuant to this Agreement or
otherwise; (ii) "Separation Payment" shall mean a Payment paid or payable
pursuant to this Agreement (disregarding this Section); (iii) "Present Value"
shall mean such value determined in accordance with Sections 280G(b)(2)(A)(ii)
and 280G(d)(4) of the Code; and (iv) "Reduced Amount" shall mean an amount
expressed in Present Value that maximizes the aggregate Present Value of
Separation Payments without causing any Payment to be nondeductible because of
Section 280G of the Code.
(b) Taubman shall select, in its discretion, a nationally
recognized accounting firm (the "Accounting Firm") to make the determinations
contemplated by this Section 4(g). Anything in the Plan to the contrary
notwithstanding, in the event that the Accounting Firm determines that receipt
of all Payments would subject the Participant to tax under Section 4999 of the
Code, the aggregate Separation Payments shall be reduced (but not below zero) to
meet the definition of Reduced Amount.
(c) If the Accounting Firm determines that aggregate Separation
Payments should be reduced to the Reduced Amount, Taubman shall promptly give
the Executive notice to that effect and a copy of the detailed calculation
thereof, and the Executive may then elect, in his or her sole discretion, which
and how much of the Separation Payments shall be eliminated or reduced
(as long as after such election the Present Value of the aggregate Separation
Payments equals the Reduced Amount), and shall advise Taubman in writing of his
or her election within ten days of his or her receipt of notice. If no such
election is made by the Executive within such ten-day period, Taubman may elect
which of such Separation Payments shall be eliminated or reduced (as long as
after such election the Present Value of the aggregate Separation Payments
equals the Reduced Amount) and shall notify the Executive promptly of such
election. All determinations made by the Accounting Firm under this Section
shall be binding upon Taubman and the Affiliated Companies and the Executive and
shall be made within 60 days of a termination of employment of the Executive. As
promptly as practicable following such determination, Taubman shall pay or
distribute, or shall cause one of the Affiliated Companies to pay or distribute,
to or for the benefit of the Executive such Separation Payments as are then due
to the Executive under this Agreement, and shall promptly pay or distribute, or
cause to be paid or distributed, to or for the benefit of the Executive in the
future such Separation Payments as become due to the Executive under this
Agreement.
(d) As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or distributed to or
for the benefit of the Executive pursuant to this Agreement which should not
have been so paid or distributed ("Overpayment") or that additional amounts
which will have not been paid or distributed to or for the benefit of the
Executive pursuant to this Agreement could have been so paid or distributed
("Underpayment"), in each case, consistent with the calculation of the Reduced
Amount hereunder. In the event that the Accounting Firm, based upon the
assertion of a deficiency by the Internal Revenue Service against Taubman or any
of the Affiliated Companies or the Executive which the Accounting Firm believes
has a high probability of success determines that an Overpayment has been made,
any such Overpayment paid or distributed to or for the benefit of the Executive
shall be repaid by the Executive; provided, however, that no such payment shall
be made by the Executive if and to the
extent such payment would neither reduce the amount on which the Executive is
subject to tax under Section 1 and Section 4999 of the Code or generate a refund
of such taxes. In the event that the Accounting Firm, based upon controlling
precedent or substantial authority, determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid to or for the benefit of
the Executive together with interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code.
(e) All fees and expenses of the Accounting Firm in implementing
the provisions of this Section 8 shall be borne by the Company.
SECTION 9. CONFIDENTIAL INFORMATION. The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to Taubman or any of the Affiliated
Companies, and their respective businesses, which information, knowledge or data
shall have been obtained by the Executive during the Executive's employment by
the Company and which information, knowledge or data shall not be or become
public knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of Taubman or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those persons designated by the Company. In no event shall
an asserted violation of the provisions of this Section 9 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
SECTION 10. SUCCESSORS. (a) This Agreement is personal to the
Executive, and, without the prior written consent of Taubman, shall not be
assignable by the Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon Taubman and its successors and assigns. Except as provided in
Section 10(c), without the prior written consent of the Executive this Agreement
shall not be assignable by Taubman.
(c) Each of Taubman and TRG will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of its business and/or assets to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that it would
be required to perform it if no such succession had taken place. "Taubman" means
Taubman as hereinbefore defined and any successor to its business and/or assets
as aforesaid that assumes and agrees to perform this Agreement by operation of
law or otherwise. "TRG" means TRG as hereinbefore defined and any successor to
its business and/or assets as aforesaid that assumes and agrees to perform this
Agreement by operation of law or otherwise.
SECTION 11. MISCELLANEOUS. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of [MICHIGAN], without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified other than by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
if to the Executive:
At the most recent address on file at the Company
if to Taubman:
Taubman Centers, Inc.
000 Xxxx Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
if to TRG:
Taubman Realty Group Limited Partnership
000 Xxxx Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) Taubman may withhold or cause to be withheld from any
amounts payable under this Agreement such United States federal, state or local
or foreign taxes as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's or Taubman's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or Taubman may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(f) The Executive, Taubman and TRG acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and Taubman or any of the Affiliated Companies, the employment of the
Executive by the Company is "at will" and, subject to Section 1(a), prior to the
Effective Date, the Executive's employment may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date, except as specifically provided herein, this Agreement shall
supersede any other
agreement between the parties with respect to the subject matter hereof
including without limitation the Employment Agreement between The Taubman
Company Limited Partnership, a Michigan Limited Partnership, and the Executive
dated as of January 3, 1997.
SECTION 12. GUARANTEE. TRG hereby irrevocably, absolutely and
unconditionally guarantees the payment of all compensation and benefits (the
"Benefits") that Taubman is obligated to provide or cause to be provided to the
Executive under this Agreement. This is a guarantee of payment and not a
collection, and is the primary obligation of TRG, and the Executive may enforce
this guarantee against TRG without any prior enforcement of the obligation to
make the Benefits against Taubman.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from the Board, Taubman and TRG have each caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.
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TAUBMAN CENTERS INC.
As guarantor of Taubman Centers Inc.:
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TAUBMAN REALTY GROUP LIMITED
PARTNERSHIP
