EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
June 23, 2000 (the "Effective Date"), by and between BRE PROPERTIES, INC., a
Delaware corporation (the "Company"), and XXXXXX X. XXXXX, XX. (the
"Executive").
Background
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WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, on the terms and subject to the conditions of this
Agreement.
NOW, THEREFORE, in consideration of the covenants, duties, terms, and
conditions set forth in this Agreement, the parties agree as follows:
1. Term. The term of this Agreement is from June 23, 2000 to June 23,
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2003, unless earlier terminated pursuant to Section 7 (the "Term"). Executive
shall commence the rendering of services under this Agreement no later than July
24, 2000.
2. Duties. Executive shall be employed by the Company as its Executive
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Vice-President and Chief Financial Officer. Executive shall be under the
direction and supervision of the Company's Chief Executive Officer ("CEO") and
its Board of Directors (the "Board"). Executive shall devote his full business
time and best efforts to the Company, with his powers and duties to be
determined by the CEO. Executive shall not, except for incidental management of
his personal financial affairs, engage in any other business, nor shall he serve
in any position with any other corporation or entity, without the prior written
consent of the CEO.
3. Compensation. During the Term, Executive shall be entitled to receive
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compensation in accordance with this Section 3.
3.1 Base Salary. Executive shall receive an annual base salary
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("Base Salary") of $250,000 commencing on his first day of work. The Board, in
its discretion, may review the Base Salary annually and increase the Base Salary
based on relevant circumstances.
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The Base Salary shall be payable by the Company to the Executive in equal
installments on the dates payments of salary are regularly made by the Company
to its executive employees.
3.2 Annual Performance Bonus. Executive shall be eligible to receive
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an annual incentive bonus (the "Annual Bonus") targeted at 40% of Base Salary
for each fiscal year of the Company during the Term (except that the initial
Annual Bonus shall be computed on a pro rata basis for fiscal year 2000). The
amount of the Annual Bonus shall be based on the achievement of management by
objective criteria established by the Board (the "MBO Criteria"). It is
anticipated that, for any given year, the amount of the Annual Bonus could range
from 0% of Base Salary (in the event of a failure to achieve the Annual
Criteria), to 40% of Base Salary (in the event of achievement of the Annual
Criteria), to between 40% and 80% of Base Salary (in the event the Annual
Criteria are exceeded). Except as otherwise specified in this Agreement,
Executive shall earn the Annual Bonus only at the end of each of the Company's
fiscal years during the Term. The Annual Bonus, if earned, shall be paid within
90 days after the end of each fiscal year.
3.3 Initial Long-Term Incentive Awards.
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(a) On the Effective Date of this Agreement and subject to
Executive commencing work, pursuant to the 1999 BRE Stock Incentive Plan, the
Company shall grant Executive an incentive stock option to purchase 50,000
shares of the Company's Common Stock ("Common Stock") at an exercise price equal
to the Market Value on the date of this Agreement which shall vest in equal
annual 10,000 share installments over five years (the "Options") and the Options
shall be evidenced by a stock option agreement containing the terms and
provisions of such Options (including, without limitation, term and termination
provisions) together with such other terms and conditions as the Company may
reasonable require to assure compliance with applicable law and stock exchange
requirements.
(b) The Company shall also make a full recourse, five-year loan
to Executive in an amount equal to the aggregate price for 10,000 shares of
Common Stock at Market Value on the Effective Date of this Agreement (the "Stock
Loan"). The Stock Loan shall be made pursuant to a loan agreement between
Company and Executive in the form of
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Exhibit A to this Agreement (the "Stock Loan Agreement"), under which the
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shares so acquired (and any securities resulting from ownership of such shares)
shall be pledged by Executive to the Company as collateral for amounts payable
under the Stock Loan Agreement.
(c) Within five days of each of the Company's dividend payment
dates, commencing September 1, 2000, during the term of this Agreement, and
provided that Executive has not exercised any of the stock options granted to
him pursuant to Section 3.3(a), Executive shall be entitled to receive a bonus
equal to the dividend a shareholder of the Company would receive on 10,000
shares of Common Stock. In the event Executive exercises his option in whole or
in part, the number of deemed shares on which the dividend is based would be
reduced pro rata based on the ratio of the number of options exercised as
compared to 50,000. This benefit will terminate on the first to occur of the
following: (i) the fifth anniversary of the Effective Date; (ii) the termination
of Executive's employment for any reason; or (iii) the exercise or termination
of all of the options granted to Executive pursuant to Section 3.3(a).
3.4 Future Long-Term Incentive Awards. Beginning with the year
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commencing on January 1, 2001, and continuing with each subsequent fiscal year
during the Term, Executive shall be eligible to receive additional long-term
incentive awards at the discretion of the Board. It is contemplated that such
awards will take into account financial, operating, and other results achieved
during the preceding fiscal year as well as future long-term performance goals.
Such awards may be in the form of options, restricted shares, SARs, stock sales,
stock grants, forgivable loans, or any other form of long-term compensation, as
determined by the Board. However, regardless of form, it is contemplated that
the annual awards to Executive will provide Executive with the opportunity to
receive, assuming achievement of all applicable performance goals, the financial
equivalent of (i) a forgivable performance-based five-year loan to purchase
6,000 shares of Common Stock (with interest payable quarterly), and (ii) options
to purchase 25,000 shares of Common Stock at Market Value on the date of award.
4. Benefits. During the Term, Executive shall be entitled to receive such
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other benefits and to participate in such benefit plans as are generally
provided by the Company to its
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executive employees, including, without limitation, parking and profit sharing
and insurance plans. Executive shall be entitled to four weeks vacation for each
calendar year.
5. Expenses. The Company shall pay or reimburse Executive for all
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reasonable travel and other expenses incurred by Executive in performing his
duties under this Agreement in accordance with Company policy. In addition,
Executive shall be reimbursed by the Company (upon presentation of appropriate
documentation) for reasonable out-of-pocket expenses related to relocating to
the San Francisco Bay Area for moving expenses for household goods, travel for
Executive and family to the San Francisco Bay Area, trips for locating housing,
and either, at Company's election, a temporary housing allowance not to exceed
$3,000 per month for a period of up to six months or the right to occupy an
apartment reasonably selected by the Company on a rent-free basis for six
months. In addition, Executive shall be reimbursed for a maximum of $25,000 of
brokerage commissions on the sale of his Ohio residence.
6. Moving Assistance. The Company shall provide Executive with a five
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year, full recourse loan (the "Moving Assistance Loan") in an original principal
amount of $150,000 at an interest rate equal to the mid-term federal rate as
defined in Section 1274 of the Internal Revenue Code. Interest shall accrue and
shall be payable solely at the election of Executive.
The Moving Assistance Loan documentation shall contain provisions for
acceleration upon termination of employment by the Company with cause or upon
termination by the Executive without good reason as specified below and for
forgiveness on a pro-rata basis of the principal amount of the loan and all
accrued interest on each anniversary of the Effective Date and full forgiveness
in the event Executive remains continuously employed by the Company for five
years, dies, becomes disabled, is terminated without cause or terminates his
employment with good reason pursuant to Section 8.2(c).
7. Termination of Employment.
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7.1 Termination Due to Death or Disability; Voluntary Termination.
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If at any time during the Term, Executive shall die, suffer any Disability (as
defined below), or voluntarily terminate his employment by the Company, then, in
any such event, his employment under this
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Agreement shall automatically terminate on the date of death, upon any
Disability, or the date of voluntary termination, as the case may be. As used
herein, the term "Disability" shall mean the inability of Executive to perform
his duties because of physical or mental illness or incapacity as determined by
the Board.
7.2 Termination by the Company for Good Cause. The Company may
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terminate this Agreement and Executive's employment at any time for Good Cause.
In such event, this Agreement shall terminate on such date as shall be specified
in writing by the Company. As used herein, the term "Good Cause" shall mean (i)
any act or omission of gross negligence, willful misconduct, dishonesty, or
fraud by Executive in the performance of his duties hereunder or in material
violation of the Company's employment policies and practices, (ii) the failure
or refusal of Executive to perform the duties or to render the services assigned
to him from time to time by the CEO or the Board, (iii) the charging or
indictment of Executive in connection with a felony or any misdemeanor involving
dishonesty or moral turpitude, or (iv) the material breach by Executive of this
Agreement or the breach of Executive's fiduciary duty or duty of trust to the
Company.
7.3 Termination by the Company Other Than for Good Cause. The
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Company may terminate this Agreement and Executive's employment for any reason
other than for Good Cause. In such event, this Agreement shall terminate on the
30th day following written notice of such termination by the Company.
8. Compensation upon Termination.
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8.1 Termination Other Than in Connection With a Change in Control.
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(a) In the event of termination of Executive's employment pursuant to
Section 7.1 or 7.2, the Company shall not be obligated, from and after the date
of termination, to provide to Executive, and Executive shall not be entitled to
receive from the Company, any compensation (including any payments of Base
Salary, Annual Bonus, or other awards) or other benefits; except that if
termination pursuant to Section 7.1 is due to death or Disability, Executive or
his estate shall receive, within 90 days after the close of the fiscal year in
which the
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death or Disability occurred, a lump-sum payment equal to the estimated Annual
Bonus that the Executive would have earned for the fiscal year in question
(based on actual performance relative to MBO Criteria for the fiscal year and
Executive's contribution up to the date of death or Disability), calculated on a
pro-rated basis to the date of termination. In the case of any termination of
employment pursuant to Sections 7.1 prior to the fifth anniversary of this
Agreement, the outstanding principal balance (but not accrued interest which
shall be forgiven) of the Moving Assistance Loan shall be due and payable in
full 180 days following the termination date; provided, however, that in the
case of termination based upon death or Disability, the outstanding balance on
the Moving Assistance Loan shall be forgiven. In the case of any termination of
employment pursuant to Sections 7.2 prior to the fifth anniversary of this
Agreement, the outstanding principal balance (but not accrued interest which
shall be forgiven) of the Moving Assistance Loanshall be due and payable in full
15 days following the termination date. In the case of any termination of
employment pursuant to Sections 7.1 or 7.2, the outstanding balance under the
Stock Loan Agreements set forth in Exhibit A, and any other similar agreements
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Executive and the Company enter into pursuant to Section 3.3 (collectively the
"Stock Loan Agreements"), and all accrued interest, shall be due and payable in
full 15 days following the termination date; provided, however, that in the case
of termination based upon death or Disability, the outstanding balance on each
such Loan shall be reduced by such amount by the Pro Rata Calculation (in which
case, the Company may delay the due date to complete the Pro Rata Calculation).
For the purpose of this Agreement, "Pro Rata Calculation" shall mean a pro rata
application of Sections 6.1, 6.2, and 6.3 of each of the Loan Agreements as
described in Exhibit B to this Agreement, taking into consideration the
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number of full months worked and the Company's performance data through the last
quarter having ended 45 days or more prior to the termination date, not
withstanding the fact that such sections of the Loan Agreements may not provide
for such pro rata application.
(b) In the event of termination of Executive's employment pursuant to
Section 7.3, provided that Executive provides to the Company a full and complete
release of all known and unknown claims against the Company and its
representatives, the Company shall
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provide Executive with the following compensation within fifteen (15) days after
such termination:
(i) Executive shall be entitled to receive a lump-sum
payment from the Company equal to (a) one hundred and forty percent (140%) of
his then Base Salary if termination occurs prior to Executive's first Annual
Bonus being determined pursuant to Section 3.2; (b) his then Base Salary plus
the amount of the Annual Performance Bonus awarded in the immediately preceding
year if termination occurs subsequent to the determination of the Annual
Performance Bonus for his first full year and prior to the determination for the
second full year; or (c) for any subsequent termination, his then Base Salary
plus the average of the Annual Performance Bonus awarded in the prior two years;
(ii) all restrictions (other than applicable federal and
state securities laws) on the shares of any Common Stock awarded to Employee
under Section 3.3 would be eliminated and such shares would fully vest in
Executive;
(iii) the amount payable under the Moving Assistance Loan
shall be forgiven; and
(iv) the amount payable under each Stock Loan Agreement
shall be reduced by the Pro Rata Calculation, and the balance of each Stock Loan
shall be due and payable within fifteen (15) days after such termination.
8.2 Termination Following a Change in Control. The following
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provisions shall apply in lieu of Section 8.1 if, and only if, the termination
of Executive's employment occurs within 12 months following a Change in Control
(as defined in Section 8.2(d)):
(a) In the event of termination of Executive's employment
pursuant to Section 7.1 due to death or disability, or pursuant to Section 7.2,
the provisions of Section 8.1(a) apply.
(b) In the event of termination of Executive's employment
pursuant to Section 7.1 due to voluntary termination by Executive without Good
Reason (as defined below),
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the provisions of Section 8.1(a) shall apply except that the Company shall pay
Executive within 15 days after such termination: a lump-sum payment from the
Company equal to: (x) one hundred and forty percent (140%) of his then Base
Salary if termination occurs prior to Executive's first Annual Bonus being
determined pursuant to Section 3.2; (y) his then Base Salary plus the amount of
the Annual Performance Bonus awarded in the immediately preceding year if
termination occurs subsequent to the determination of the Annual Performance
Bonus for his first full year and prior to the determination for the second full
year; or (z) for any subsequent termination, his then Base Salary plus the
average of the Annual Performance Bonus awarded in the prior two years. As used
herein, the term "Good Reason" means (i) a material change in Executive's
duties, responsibilities, or authority, or (ii) the Company's relocation of the
Executive, without the Executive's consent, to a location outside of the San
Francisco metropolitan area.
(c) In the event of termination of Executive's employment
pursuant to Section 7.1 due to voluntary termination by Executive with Good
Reason, or pursuant to Section 7.3, provided that Executive provides to the
Company a full and complete release of all known and unknown claims against the
Company and its representatives, the Company shall provide Executive with the
following compensation within 15 days after such termination:
(i) Executive shall be entitled to receive a lump-sum
payment from the Company equal to: (x) two hundred and eighty percent (280%) of
his then Base Salary if termination occurs prior to Executive's first Annual
Bonus being determined pursuant to Section 3.2; (y) his then Base Salary plus
two times the amount of the Annual Performance Bonus awarded in the immediately
preceding year if termination occurs subsequent to the determination of the
Annual Performance Bonus for his first full year and prior to the determination
for the second full year; or (z) for any subsequent termination, two times his
then Base Salary plus the sum of the Annual Performance Bonus awarded in the
prior two years;
(ii) all restrictions (except applicable federal and state
securities law) on any shares of Common Stock awarded to Employee under Section
3 would be eliminated and such shares would fully vest in Executive;
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(iii) any unvested stock options (including the Options)
held by Executive at the date of termination, would vest and become fully
exercisable for a period of three months from the date of termination;
(iv) the amount payable under the Moving Assistance
Loan shall be forgiven; and
(v) the amount payable under each Stock Loan Agreement
shall be reduced by the Pro Rata Calculation, and the balance of each Stock Loan
shall be due and payable within fifteen (15) days of termination.
(d) As used herein, a "Change in Control" shall be deemed to
have occurred when any of the following events occur:
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as
in effect on the date hereof, (a "Person")) acquiring "beneficial ownership" (as
defined in Rule 13D-3 under the Exchange Act), of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities; or
(ii) a change in the Board that is the result of a
proxy solicitation(s) or other action(s) to influence voting at a shareholders'
meeting of the Company (other than by voting one's own stock) by a Person or
group of Persons who has Beneficial Ownership of 5% or more of the combined
voting power of the securities of the Company and which causes the Continuing
Directors (as defined below) to cease to constitute a majority of the Board;
provided, however, that neither of the events described in (i) or (ii) of this
Section 8.2(d) shall be deemed to be a Change in Control if the event(s) or
election(s) causing such change shall have been approved specifically for
purposes of this Agreement by the affirmative vote of at least a majority of the
members of the Continuing Directors. For these purposes, a "Continuing Director"
shall mean a member of the Board (i) who is a member of the Board on the date of
this Agreement, or (ii) who subsequently becomes a member of the Board and who
either (x) is appointed or recommended for election with the affirmative vote of
a majority of the Directors
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then in office who are Directors on the date hereof, or (y) is appointed or
recommended for election with the affirmative vote of a majority of the
Directors then in office who are described in clauses (i) and (ii) (including
clause (ii)(y)), as applicable.
(e) Notwithstanding anything to the contrary in this Section
8.2, if any of the payments or other compensation to be made to Executive
pursuant to this Section 8.2 are determined to be "parachute payments" as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then the amount of such payments or other compensation shall be reduced
to the largest amount which would not constitute "parachute payments" as so
defined.
9. Confidentiality. It is specifically understood and agreed that some of
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the Company's business activities are secret in nature and constitute trade
secrets, or are otherwise confidential and/or proprietary in nature, including
but not limited to the Company's "know-how," methods of business and operations,
and property and financial analyses and reports (all such information,
"Proprietary Information"). All of the Company's Proprietary Information is and
shall be the sole property of the Company for its own exclusive use and benefit,
and Executive agrees that upon termination of his employment for any reason
whatsoever, he shall return to the Company all Proprietary Information in his
possession or under his control. Executive further agrees that he shall hold
all of the Company's Proprietary Information in strictest confidence and shall
not at any time, either during or after his employment by the Company, use or
disclose, or permit the use or disclosure of, the same for his own benefit or
for the benefit of others, unless authorized to do so by the Company's written
consent or by a contract or agreement to which the Company is a party or by
which it is bound. The provisions of this Section 9 shall perpetually survive
the termination of the Agreement, and Executive shall likewise be bound by all
other agreements between him and the Company relating in any way to the
protection of the Company's Proprietary Information.
10. Arbitration. If a dispute arises between Company and Executive
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concerning this Agreement, or in any way relating to Executive's employment by
the Company and/or the termination thereof, the disputed matter shall first be
submitted to mandatory mediation, such
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mediation to be conducted in the City of San Francisco pursuant to the then-
current rules of the Judicial Arbitration and Mediation Services ("JAMS") by a
mediator affiliated with JAMS, or by such other mediator as is mutually
agreeable to the parties. If the mediation does not successfully resolve such
dispute, then the dispute shall be submitted to mandatory, final, and binding
arbitration in the City of San Francisco, California in accordance with the
employment arbitration rules of the American Arbitration Association ("AAA
Rules"). Any judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof. The arbitrators shall have the
authority to grant any equitable and legal remedies that would be available in
any judicial proceeding instituted to resolve the disputed matter. The
arbitrators shall apply the law of the State of California in making any
determination hereunder. Notwithstanding anything to the contrary which may now
or hereafter be contained in the AAA Rules, the parties agree any such
arbitration shall be conducted before a panel of three arbitrators, who shall be
compensated for their services at a rate to be determined by the American
Arbitration Association in the event the parties are not able to agree upon
their rate of compensation. Each party shall have the right to appoint one
arbitrator (to be appointed within twenty days of the notice of a dispute to be
resolved by arbitration hereunder), and the two arbitrators so chosen shall
mutually agree upon the selection of the third, impartial arbitrator. The
majority decision of the arbitrators will be final and conclusive upon the
parties hereto. The parties hereby acknowledge and agree that final and binding
arbitration shall be the sole and exclusive means of resolving any such dispute,
that they waive all rights to a civil court action, and that the dispute shall
be fully and finally resolved by the arbitrators and shall not be resolved by a
jury or a court.
11. Taxes; Withholdings. All compensation payable by the Company to the
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Executive under this Agreement which is or may become subject to withholding
under the Code or other pertinent provisions of laws or regulation shall be
reduced for all applicable income and/or employment taxes required to be
withheld.
12. Administration by the Board. The Board, or its Compensation Committee
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as determined by the Board, shall be (i) solely responsible for the
interpretation and administration of this Agreement, the Moving Assistance Loan
and the Stock Loans, and (ii) entitled to modify
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this Agreement and the (including, without limitation, performance criteria and
targets) as necessary or appropriate to achieve the purposes and intents of the
same in light of changing or extenuating circumstances. All such actions,
decisions, and modifications regarding this Agreement, the Moving Assistance
Loan or the Stock Loans made in good faith by the Board, or by its Compensation
Committee, shall be final and binding on Executive.
13. Upon Termination of this Agreement. The Company shall have the right,
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without any notice to the Executive, to offset any amounts payable to the
Company under any of the Stock Loans or Moving Assistance Loan against any
amount payable to the Executive pursuant to this Agreement.
14. Miscellaneous.
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14.1 Written notices required by this Agreement shall be sent to
Company or Executive by certified mail, with a return receipt requested, to
Company's registered address and to Executive's last shown address on Company's
records, respectively. Such notice shall be deemed to be delivered two days
after mailing.
If to Company: BRE Properties, Inc.
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Forty Four Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Attn: Xxxxx XxXxxxxx
With Copy to: Xxxxxxx Xxxxx & Xxxxxx LLP
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000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx, Esq.
If to Executive: Xxxxxx X.Xxxxx, Xx.
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00000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
14.2 This Agreement contains the full and complete understanding of
the parties and supersede all prior representations, promises, agreements, and
warranties, whether oral or written.
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14.3 This Agreement shall be governed by and interpreted according to
the laws of the State of California.
14.4 With respect to the Company, this Agreement shall inure to the
benefit of and be binding upon any successors or assigns of Company. With
respect to Executive, this Agreement shall not be assignable but shall inure to
the benefit of estate of Executive or his legal successor upon death or
disability.
14.5 The captions of the various sections of this Agreement are
inserted only for convenience and shall not be considered in construing this
Agreement.
14.6 This Agreement can be modified, amended, or any of its terms
waived only by a writing signed by both parties.
14.7 If any provision of this Agreement shall be held invalid,
illegal, or unenforceable, the remaining provisions of the Agreement shall
remain in full force and effect, and the invalid, illegal, or unenforceable
provision shall be limited or eliminated only to the extent necessary to remove
such invalidity, illegality, or unenforceability in accordance with the
applicable law at that time.
14.8 Without limiting the provisions of Section 10, if either party
institutes arbitration proceedings pursuant to Section 10 or an action to
enforce the terms of this Agreement, the prevailing party in such proceeding or
action shall be entitled to recover reasonable attorneys' fees, costs, and
expenses.
14.9 No remedy made available to Company by any of the provisions of
this Agreement is intended to be exclusive of any other remedy. Each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder as well as those remedies existing at law, in equity, by statute, or
otherwise.
14.10 Executive represents that the execution of this Agreement by
Executive will not violate any other agreement to which Executive is a party.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
specified in the first paragraph.
COMPANY: BRE PROPERTIES, INC.
By: /s/ Xxxxx X. XxXxxxxx
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Its: President and Chief Executive Officer
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EXECUTIVE: XXXXXX X. XXXXX, XX.
/s/ Xxxxxx X. Xxxxx, Xx.
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