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Exhibit 10.9
INCENTIVE COMPENSATION AGREEMENT
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THIS AGREEMENT is made as of the 25th day of August, 1995 by and
between PROPERTY CAPITAL TRUST, a Massachusetts business trust ("PCT"), and
XXXXXX X. XXXXXX ("Xxxxxx").
W I T N E S S E T H :
- - - - - - - - - -
Xxxxxx is the President, Chief Executive Officer and Chief Financial
Officer of PCT, and is also a Trustee of PCT.
On May 24, 1995 the Trustees of PCT, subject to obtaining the requisite
approval of PCT's shareholders at the next annual meeting of PCT, adopted a new
business plan pursuant to which PCT will dispose of all of its investments over
a reasonable period of time, estimated to be between three and five years.
The independent Trustees of PCT believe that it is essential to the
success of the new business plan that Xxxxxx remain with PCT in his present
positions and oversee the implementation of such plan. Such Trustees
recognize, however, that as the new business plan is implemented, PCT will
decrease in size and ultimately terminate and go out of business.
In the circumstances, the independent Trustees believe it in the best
interests of PCT to provide Xxxxxx with incentive compensation which will both
motivate him to
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remain with PCT throughout the implementation of the new business plan and
reward him based on the amount he is able to realize for PCT and its
shareholders upon the disposition of PCT's investments.
The parties hereto desire to set forth in this Agreement the terms and
conditions of the incentive compensation which Xxxxxx will be entitled to
receive, as recommended by the Compensation Committee to, and approved on
August 25, 1995 by, the independent Trustees.
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
1. COMPENSATION. Xxxxxx shall receive incentive compensation equal
to the amount he would realize if he had purchased on May 24, 1995 250,000
shares of PCT's common stock (the "Phantom Shares") at $6.75 per share, the
market price of a share of PCT's common stock on May 24, 1995, with the
proceeds of a loan made to him by PCT bearing interest at the rate of 10% per
annum, compounding monthly (the "Phantom Loan"). For purposes of calculating
amounts due to Xxxxxx under this Agreement, each dividend and other
distribution paid on each share of common stock of PCT subsequent to May 24,
1995 shall also be deemed simultaneously to have been paid on each of the
Phantom Shares. If Xxxxxx is an employee of PCT on the date on which PCT's
common stock trades or is otherwise valued on an ex-dividend basis with respect
to any publicly-announced dividend or other distribution to be paid on such
stock, and
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if prior to the payment date for such dividend or other distribution Xxxxxx'x
employment with PCT is terminated, then except in any of the circumstances
specified in clauses (i) and (ii) of paragraph B below such dividend or other
distribution shall be deemed to be paid on the Phantom Shares and shall be
applied or paid as provided in paragraph A below. If PCT hereafter institutes
a stock repurchase program, amounts paid by PCT to repurchase its own shares
shall not be deemed to be distributions paid on such shares. Such incentive
compensation shall be calculated and paid as follows:
A. An amount equal to all dividends and other distributions
which are deemed to have been paid on the Phantom Shares shall be deemed to be
applied first to pay accrued interest on, and then to repay the unpaid
principal balance of, the Phantom Loan until such loan has been paid in full.
Thereafter, PCT shall pay to Xxxxxx in cash an amount equal to all dividends
and other distributions deemed paid on the Phantom Shares. Each such payment
shall be made by PCT to Xxxxxx at the time the dividend or other distribution
is paid to PCT shareholders.
B. Upon the termination of Xxxxxx'x employment with PCT,
whether such termination results from Xxxxxx'x discharge by or his election to
leave PCT, Xxxxxx'x death or disability or a termination by reason of the
termination of PCT, PCT shall pay to Xxxxxx, within 15 days after such
termination (or, if later, when the market value
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of the Phantom Shares is determined as hereinafter provided), an amount in cash
equal to the excess of the market value of the Phantom Shares over the amount,
if any, then due on account of accrued and unpaid interest on, and
principal of, the Phantom Loan. Notwithstanding the foregoing: (i) if Xxxxxx
voluntarily terminates his employment with PCT at any time on or before August
31, 1996, he shall not be entitled to receive any incentive compensation
pursuant to this Agreement unless such termination was either for Good Reason
or occurs within six months following a Change of Control; and (ii) if Xxxxxx
voluntarily terminates his employment with PCT under circumstances which would
require him to give PCT at least six months prior notice of such termination
pursuant to paragraph 3 of the Termination Agreement mentioned below and Xxxxxx
fails to give such notice to PCT, or if PCT terminates Xxxxxx'x employment for
Cause, Xxxxxx shall not be entitled to receive any incentive compensation
payment pursuant to this paragraph B or any further payments of incentive
compensation pursuant to paragraph A above. As used in this paragraph B, the
terms "Good Reason," "Change of Control" and "Cause" shall have the meanings
ascribed to those terms in the Termination Agreement dated as of October 19,
1992 between PCT and Xxxxxx, as amended. The "market value" of the Phantom
Shares shall be the average of the daily market price of a share of PCT's
common stock for each of the ten consecutive trading days immediately preceding
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the date of termination of Xxxxxx'x employment, multiplied by 250,000;
provided, however, that if after the commencement of such ten-day period PCT's
common stock trades or is otherwise valued on an ex-dividend basis with respect
to any publicly-announced dividend or other distribution to be paid on said
stock, in lieu of the ten-day period specified above there shall be utilized
the ten-day period which commences on the first day on which PCT's common
stock so trades or is otherwise valued on an ex-dividend basis. If PCT's
common stock is traded on a securities exchange or the Nasdaq-National Market,
the market price for each such trading day shall be the closing price on such
day or, if no sales take place on such day, the average of the closing bid and
asked prices on such day. If PCT's common stock is not traded on a securities
exchange or the Nasdaq-National Market, the market price for each such trading
day shall be determined by agreement of PCT and Xxxxxx or, in the absence of
such agreement within 15 days after the date of such termination, by a
reputable investment banker selected by PCT.
C. If prior to the termination of Xxxxxx'x employment with
PCT, PCT merges or consolidates into or with another entity and PCT is not the
survivor, the surviving entity shall pay to Xxxxxx, within 30 days after the
effective date of such merger or consolidation, an amount in cash equal to the
excess of (i) the value placed on a share of PCT's common stock in connection
with such merger or
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consolidation multiplied by 250,000 over (ii) the amount, if any, then due on
account of accrued and unpaid interest on, and principal of, the Phantom Loan.
If in connection with any such merger or consolidation the consideration
received by PCT's shareholders is not cash but securities of another entity,
then: (a) if the merger or consolidation agreement fixes the dollar value of
such securities to be received by PCT's shareholders, such dollar value, on a
per PCT share basis, shall be utilized in calculating the amount to be paid to
Xxxxxx pursuant to this paragraph C; or (b) if the merger or consolidation
agreement fixes the number, but not the dollar value, of such securities to be
received by PCT's shareholders, then the market value of such securities on the
effective date of such merger or consolidation, on a per PCT share basis, shall
be utilized in calculating the amount to be paid to Xxxxxx pursuant to this
paragraph C, such market value to be determined in the same manner as the
market value of PCT's shares is to be determined pursuant to paragraph B above.
D. To the extent that incentive compensation payable to Xxxxxx
pursuant to this Agreement (including incentive compensation deferred from a
prior taxable year) in any taxable year of PCT would exceed, when added to all
other remuneration (within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended) received by Xxxxxx from PCT for or in respect
of such taxable year, the sum of $1 million and Xxxxxx
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qualifies as a "covered employee" (as defined in such Section 162(m)), any such
excess shall be deferred to, and paid in the first quarter of, the next
succeeding taxable year of PCT. The provisions of this paragraph D shall cease
to apply effective with any taxable year in which PCT's existence is terminated
or in which PCT merges or consolidates into or with another entity and is not
the surviving entity.
E. Except as contemplated by paragraphs A, B and C above,
Xxxxxx shall not be entitled to receive any payments in respect of the Phantom
Shares.
F. If PCT effects a stock split, combination or
reclassification of its common stock, the number of Phantom Shares shall be
adjusted accordingly to reflect such stock split, combination or
reclassification.
2. CONDITION. In the event that the requisite approval of
shareholders of PCT to amendments to PCT's declaration of trust that are
required for the implementation of PCT's new business plan is not obtained at
PCT's next annual meeting, currently scheduled for December 1995, or any
adjournment thereof, this Agreement shall be and become of no force or effect.
3. Miscellaneous
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A. This Agreement and the benefits hereunder may not be
assigned by Xxxxxx, but shall inure to the benefit of his heirs and legal
representatives. This
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Agreement shall be binding upon PCT and its successors and assigns.
B. In no event shall Xxxxxx be entitled to receive any
shares of PCT's common stock pursuant to the terms of this Agreement, and
nothing contained herein shall confer on Xxxxxx any rights as a record or
beneficial owner of PCT's common stock.
C. The law of the Commonwealth of Massachusetts shall govern
the construction and interpretation of this Agreement.
D. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
E. PCT may withhold from any amount payable under this
Agreement to Xxxxxx any portion thereof which PCT may be obligated by law or
regulation to withhold from such amount.
F. The headings in this Agreement are for convenience only
and are not to be utilized in the interpretation or construction of this
Agreement.
G. Any amendments to this Agreement must be in writing and
executed by both parties hereto.
H. Any notices which one party may desire to send to the
other hereunder shall be in writing and shall be either personally delivered or
sent by reputable
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overnight delivery service to the applicable address set forth below:
If to PCT:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: General Counsel
If to Xxxxxx:
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Notice shall be deemed given upon receipt or upon refusal of the addressee to
accept delivery. Notice of change of address by either party may be given as
provided herein for other notices.
I. The obligations of PCT under or in respect of this
Agreement shall not constitute personal obligations of the Trustees, officers,
shareholders or employees of PCT, or any of them, and shall not create or
involve any personal liability on the part of them, or any of them, and Xxxxxx
and anyone claiming by, through or under Xxxxxx shall look solely to the assets
of PCT for satisfaction of any liability of PCT under or with respect to this
Agreement and shall not to seek recourse against such Trustees, officers,
shareholders or employees, or any of them, or any other personal assets for
such satisfaction.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PROPERTY CAPITAL TRUST
By: /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx, as Trustee
and not individually
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
