Exhibit 10.10
SEVERANCE PROTECTION AGREEMENT
This Severance Protection Agreement (the "Agreement") is entered into
as of January 1, 2000 (the "Effective Date") between Xxxxx X. Xxxxx
("Executive") and AmeriVest Properties Inc., a Maryland corporation (the
"Company"). For purposes of this Agreement, each of Executive and the Company is
individually referred as a "Party", and Executive and the Company are referred
to collectively as the "Parties".
Recital
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This Agreement sets forth the understanding between the Company and
the Executive concerning the circumstances under which Executive will be
entitled to receive severance benefits in the event that Executive's employment
with Company terminates under the circumstances identified in this Agreement and
describes the nature and amount of the severance benefits.
Agreement
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In consideration of the premises and the mutual covenants contained in
this Agreement, the Parties agree as follows:
1. Definitions.
1.1. Accrued Compensation. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all amounts
earned or accrued through the date for which the determination is made but
that is not paid as of that date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the
Executive on behalf of the Company during the period ending on the
Termination Date, and (iii) vacation and sick leave pay (to the extent
provided by Company policy or applicable law.
1.2. Base Amount. For purposes of this Agreement, "Base Amount"
shall mean the Executive's annual base salary at the rate in effect on the
Termination Date, and shall include all amounts of his base salary that are
deferred under the qualified and non-qualified employee benefit plans of
the Company or any other agreement or arrangement.
1. Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive has been convicted of a felony
involving moral turpitude or the termination is evidenced by a resolution
adopted in good faith by two-thirds of the Board of Directors of the
Company (the "Board") that the Executive (a) intentionally and continually
failed substantially to perform Executive's reasonably assigned duties with
the Company (other than a failure resulting from the Executive's incapacity
due to physical or mental illness or from the Executive's assignment of
duties that would constitute "Good Reason" as hereinafter defined), which
failure continued for a period of at least 30 days after a written notice
of demand for substantial performance has been delivered to the Executive
specifying the manner in which the Executive has failed substantially to
perform, or (b) intentionally engaged in conduct which is demonstrably and
materially injurious to the Company; provided however, that no termination
of the Executive's employment shall be for Cause until (x) there shall have
been delivered to the Executive a copy of a written notice setting forth
that the Executive was guilty of the conduct set forth in this Section 1.4
and specifying the particulars thereof in detail, and (y) for a 10-day
period following delivery of the notice, the Executive shall have been
provided an opportunity to be heard in person by the Board (with the
assistance of the Executive's counsel if the Executive so desires). Neither
an act nor a failure to act, on the Executive's part, shall be considered
"intentional" unless such act or failure to act by the Executive involved a
lack of good faith and a lack of reasonable belief on the part of the
Executive that the Executive's action or failure to act was in the best
interests of the Company. Notwithstanding anything contained in this
Agreement to the contrary, no failure to perform by the Executive after a
Notice of Termination is given by the Executive shall constitute Cause for
purposes of this Agreement. In determining the two-thirds majority of the
Board required by the provisions of the first sentence of this paragraph,
the Executive shall not be counted in either the numerator or the
denominator of the fraction.
1.5. Company. For purposes of this Agreement, the "Company" shall
include the Company's "Successors and Assigns" (as hereinafter defined).
1.6. Disability. For purposes of this Agreement, "Disability"
shall mean a physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties with the Company for a period
of 90 consecutive days and the Executive has not returned to his full time
employment prior to the Termination Date as stated in the "Notice of
Termination" (as hereinafter defined).
1.7. Good Reason.
(a) For purposes of this Agreement, "Good Reason" shall mean
the occurrence of any of the events or conditions described in
subsections (1) through (9) hereof:
(1) a change in the Executive's status, title or
position to a status, title or position not equal to at least an
executive vice president, or a change in the Executive's
responsibilities (including reporting responsibilities) to
responsibilities other than in one or more of the areas of
finance, accounting, human resources, senior property management,
director or senior supervision, property acquisitions, investor
relations or other public company matters, which, in the
Executive's reasonable judgment, represents an adverse change
from his status, title, position or responsibilities; the
assignment to the Executive of any duties or responsibilities
which, in the Executive's reasonable judgment, are inconsistent
with his status, title, position or responsibilities, including
responsibilities other than in the areas set forth above; or any
removal of the Executive from or failure to reappoint or reelect
him to any of such offices or positions, including as a director
of the Company, except in connection with the termination of his
employment for Disability, Cause, as a result of his death, or by
the Executive other than for Good Reason;
(2) a reduction in the Executive's base salary or any
failure to pay the Executive any compensation or benefits to
which Executive is entitled within five days of notice thereof;
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(3) during the first three years of this Agreement, the
Company's requiring the Executive to be based at any place
outside a 25-mile radius from his current place of employment,
except for reasonably required travel on the Company's business
which is not materially greater than such travel requirements
prior to a Change in Control;
(4) the failure by the Company to provide the Executive
with compensation and employee benefits, in the aggregate, at
least equal (in terms of benefit levels and/or reward
opportunities) to the following (collectively, the "Benefits"):
those paid to other Executives of the Company or of Sheridan
Realty Advisors, LLC (the "Advisor") at the senior vice-president
and/or executive vice president level (the "Peer Group);
(5) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the
Company, which petition is not dismissed within 60 days;
(6) any material breach by the Company of any provision
of this Agreement;
(7) any purported termination of the Executive's
employment for Cause by the Company which does not comply with
the terms of Section 1.4;
(8) any event or occurrence constituting "good reason,"
as it may be defined in any agreement between the Executive and
the Company or any of its affiliates; or
(9) the failure of the Company to obtain an agreement,
satisfactory to the Executive, from any Successors and Assigns to
assume and agree to perform this Agreement, as contemplated in
Section 6 hereof.
(b) The Executive's right to terminate his employment
pursuant to this Section 1.7 shall not be affected by his incapacity
due to a Disability.
1.8. Notice of Termination. For purposes of this Agreement,
"Notice of Termination" shall mean a written notice of termination from the
Company of the Executive's employment which indicates the specific
termination provision in this Agreement relied upon and which 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.
1.9. Successors and Assigns. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity acquiring
all or substantially all the assets and business of the Company whether by
operation of law or otherwise, and any affiliate of such Successors and
Assigns.
1.10. Termination Date. For purposes of this Agreement,
"Termination Date" shall mean (a) in the case of the Executive's death, his
date of death, (b) in the case of Good Reason, the last day of his
employment, and (c) in all other cases, the date specified in the Notice of
Termination; provided, however, that if the Executive's employment is
terminated by the Company due to Disability, the date specified in the
Notice of Termination shall be at least 30 days from the date the Notice of
Termination is given to the Executive, further provided that in the case of
Disability the Executive shall not have returned to the full-time
performance of his duties during such period of at least 30 days.
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2. Termination of Employment.
2.1 Severance Pay and Benefits. If, during the term of this
Agreement, the Executive shall cease to be employed by Company, the
Executive shall be entitled to the compensation and benefits described
below depending upon the circumstances related to such cessation of
employment.
(a) If the Executive's employment with the Company shall be
terminated: (i) by the Company for Cause, (ii) by the Executive other
than for Good Reason, or (iii) by the Executive because of death or
Disability, the Company shall pay to the Executive the Accrued
Compensation.
(b) If the Executive's employment with the Company shall be
terminated before the Executive's death (i) by the Company other than
for Cause or Disability, or (ii) by the Executive for Good Reason, the
Executive shall be entitled to the following:
(1) the Company shall pay the Executive all Accrued
Compensation;
(2) the Company shall pay the Executive or his
beneficiary as severance pay and in lieu of any further
compensation for periods subsequent to the Termination Date, for
a period ending on the earlier to occur of eighteen (18) months
following the Termination Date or Executive's sixty-fifth (65th)
birthday (the "Continuation Period"), monthly payments equal to
one-twelfth (1/12) of the Base Amount; and
(3) for the duration of the Continuation Period, the
Company shall at its expense continue the Benefits on behalf of
the Executive and Executive's dependents and beneficiaries,
including the payment of premiums for medical, dental and life
insurance provided to the Executive or anyone in the Executive's
Peer Group during the thirty (30) day period prior to the
Termination Date. The Company's obligation hereunder with respect
to the foregoing benefits shall be limited to the extent that the
Executive obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may reduce
the coverage of any benefits it is required to provide the
Executive hereunder as long as the aggregate coverages and
benefits of the combined benefit plans is no less favorable to
the Executive than the coverages and benefits required to be
provided hereunder. This subsection (3) shall not be interpreted
so as to limit any benefits to which the Executive, Executive's
dependents or beneficiaries may be entitled under any of the
Company's employee benefit plans, programs or practices following
the Executive's termination of employment, including without
limitation, retiree medical and life insurance benefits;
(4) all outstanding stock options and warrants
(consisting of those options and warrants issued to the Executive
by the Company for compensation and/or incentive purposes and not
options or warrants purchased by the Executive for investment
purposes) held by Executive shall become exercisable upon the
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Termination Date, and those options and warrants shall remain
exercisable until their respective expiration dates without
regard to the termination of Executive's employment, except that
any outstanding options held by Executive that are incentive
stock options in accordance with Section 422 of the Internal
Revenue Code of 1986, as amended (the "IRC"), shall be deemed to
be non-qualified options at such time that they may no longer be
treated as incentive stock options in accordance with Section 422
of the IRC. The exercisability of any stock options or warrants
issued to the Advisor and allocated to the benefit of Executive
shall be governed by the terms of the Equity Compensation
Agreement between the Executive and the Advisor.
2.2 Payment Form. The Accrued Compensation to be paid pursuant to
Sections 2.1(a) or 2.1(b)(1) shall be paid in a single lump sum cash
payment within 30 business days after the Executive's Termination Date (or
earlier, if required by applicable law).
2.3 No mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise, and no such payment shall be offset
or reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment except as provided in Section
2.1(b)(3).
2.4 Other severance arrangements. If the Executive is entitled to
severance pay and benefits pursuant to this Agreement, the following shall
apply:
(a) The severance pay and benefits provided for in this
Section 2 shall be reduced by the amount of any other severance or
termination pay to which the Executive may be entitled under any
agreement with the Company or any of its Affiliates.
(b) The Executive's entitlement to any other compensation or
benefits or any indemnification shall be determined in accordance with
the Company's employee benefit plans and other applicable programs,
policies and practices or any employment agreement or indemnification
agreement then in effect.
3. Notice of Termination. Any purported termination of the Executive's
employment by the Company shall be communicated by Notice of Termination to the
Executive. For purposes of this Agreement, no such purported termination shall
be effective without such Notice of Termination.
4. Excise Tax Limitation.
4.1 Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided under this
Agreement and benefits provided to, or for the benefit of, the Executive
under any other Company plan or agreement (such payments or benefits are
collectively referred to as the "Payments") would be subject to the excise
tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), the Payments shall be reduced (but
not below zero) if and to the extent necessary so that no Payment to be
made or benefit to be provided to the Executive shall be subject to the
Excise Tax (such reduced amount is hereinafter referred to as the "Limited
Payment Amount"). Unless the Executive shall have given prior written
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notice specifying a different order to the Company to effectuate the
foregoing, the Company shall reduce or eliminate the Payments, by first
reducing or eliminating the portion of the Payments which are not payable
in cash and then by reducing or eliminating cash payments, in each case in
reverse order beginning with payments or benefits which are to be paid the
farthest in time from the Determination (as hereinafter defined). Any
notice given by the Executive pursuant to the preceding sentence shall take
precedence over the provisions of any other plan, arrangement or agreement
governing the Executive's rights and entitlements to any benefits or
compensation.
4.2 The determination of whether the Payments shall be reduced to
the Limited Payment Amount pursuant to this Agreement and the amount of
such Limited Payment Amount shall be made, at the Company's expense, by an
accounting firm selected by the Executive which is one of the five largest
accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"),
together with detailed supporting calculations and documentation to the
Company and the Executive within ten days of the Termination Date, if
applicable, or such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax) and if the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to
the Payments, it shall furnish the Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect
to any such Payments. The Determination shall be binding, final and
conclusive upon the Company and the Executive.
5. Successors; Binding Agreement.
5.1. This Agreement shall be binding upon and shall inure to the
benefit of the Company, its Successors and Assigns, and the Company shall
require any Successors and Assigns to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment had
taken place.
5.2. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
6. Fees and Expenses. If Executive is the prevailing party, the
Company shall pay all legal fees and related expenses (including the costs of
experts, evidence and counsel) reasonably incurred by the Executive as they
become due as a result of (a) the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement (including, but not limited to, any
such fees and expenses incurred in connection with the Dispute), and (b) the
Executive's hearing before the Board as contemplated in Section 1.4 of this
Agreement.
7. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, by overnight courier or by facsimile, addressed to the
respective addresses and facsimile numbers last given by each party to the
other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
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8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company (except for
any severance or termination policies, plans, programs or practices) and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any other agreements with the Company
(except for any severance or termination agreement). Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
9. No Guaranteed Employment. The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is "at will" and may be terminated by either the Executive or the
Company at any time.
10. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
11. Mutual Non-Disparagement. The Company, its affiliates and
subsidiaries agree and the Company shall use its best efforts to cause their
respective executive officers and directors to agree, that they will not make or
publish any statement critical of the Executive, or in any way adversely
affecting or otherwise maligning the Executive's reputation. The Executive
agrees that it will not make or publish any statement critical of the Company,
its affiliates and their respective executive officers and directors, or in any
way adversely affecting or otherwise maligning the business or reputation of any
member of the Company, its affiliates and subsidiaries and their respective
officers, directors and employees.
12. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Colorado without giving
effect to the conflict of laws principles thereof.
14. Arbitration. Each of the Company and Executive agrees that any
claim, controversy or dispute that may arise directly or indirectly in
connection with Executive's employment or termination of employment, and /or any
associated or related disputes arising therefrom involving the Company and/or
any employee(s), Director(s), officer(s), or agent(s) of the Company, whether
arising in contract, statute, tort, fraud, misrepresentation, discrimination,
common law or any other legal theory, including, but not limited to, disputes
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relating to the making, performance or interpretation of this Agreement; and
claims or other disputes arising under Title VII of the Civil Rights Act of
1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in
Employment Act of 1967, as amended; 42 U.S.C. ss.1981, ss.1981a, ss.1983,
ss.1985, or ss.1988; the Family and Medical Leave Act of 1993; the Americans
with Disabilities Act of 1990, as amended; the Rehabilitation Act of 1973, as
amended; the Fair Labor Standards Act of 1938, as amended; the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"); the Colorado
Anti-Discrimination Act; or any other similar federal, state or local law or
regulation, whenever brought, shall be resolved by arbitration. If, however,
Executive would otherwise be legally required to exhaust administrative remedies
to obtain legal relief, Executive can and must exhaust such administrative
remedies prior to pursuing arbitration. The only legal claims between Executive
and the Company that are not included for arbitration within this Agreement are
claims for workers' compensation or unemployment compensation benefits. By
signing this Agreement, Executive voluntarily, knowingly and intelligently
waives any right Executive may otherwise have to seek remedies in court or other
forums, including the right to a jury trial. The Company also hereby
voluntarily, knowingly, and intelligently waives any right it might otherwise
have to seek remedies against Executive in court or other forums, including the
right to a jury trial. The Federal Arbitration Act, 9 U.S.C. ss.ss.1-16("FAA")
shall govern the arbitrability of all claims, provided that they are enforceable
under the FAA, as it may be amended from time to time. In the event the FAA does
not govern, the Colorado Uniform Arbitration Act shall apply. Additionally, the
substantive law of Colorado, to the extent it is consistent with the terms
stated in this Agreement for arbitration, shall apply to any common law claims.
This Agreement for arbitration supersedes any prior arbitration agreement
between Executive and the Company to the extent they are inconsistent.
A single arbitrator engaged in the practice of law shall conduct the
arbitration under the applicable rules and procedures of the American
Arbitration Association ("AAA"), unless otherwise agreed to by the Parties. Any
dispute that relates directly or indirectly to Executive's employment with the
Company or to the termination of Executive's employment will be conducted under
the AAA National Rules for the Resolution of Employment Disputes, effective June
1, 1997. Other than as set forth herein, the arbitrator shall have no authority
to add to, detract from, change, amend, or modify existing law. The arbitrator
shall have the authority to order such discovery as is necessary for a fair
resolution of the dispute. The arbitrator may award punitive damages, as allowed
by Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act
of 1991; the Age Discrimination in Employment Act of 1967, as amended; and the
Americans with Disabilities Act of 1990, as amended, regardless of any
limitations imposed by federal, state, or local laws regarding amounts that may
be awarded in arbitration proceedings. All arbitration proceedings, including
without limitation, settlements under this Agreement, will be confidential. The
Company and the Executive shall each pay one half of the arbitrator's hourly
fees and expenses. The prevailing party in any arbitration shall be entitled to
receive reasonable attorneys' fees and related expenses (including the costs of
experts, evidence and counsel) as provided by law. The arbitrator's decision and
award shall be final and binding, as to all claims that were, or could have
been, raised in the arbitration, and judgment upon the award rendered by the
arbitrator may be entered to any court having jurisdiction thereof. If any party
hereto files a judicial or administrative action asserting claims subject to
this arbitration provision, and another party successfully stays such action
and/or compels arbitration of such claims, the party filing said action shall
pay the other party's costs and expenses incurred in seeking such stay and/or
compelling arbitration, including reasonable attorneys' fees not to exceed Two
Thousand Five Hundred Dollars ($2,500.00).
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15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof, and, in
such event, such provision shall be changed and interpreted so as to best
accomplish the objectives of such invalid or unenforceable provision within the
limits of applicable law or applicable court decisions.
16. Term Of Agreement. This Agreement shall commence on the Effective
Date and shall continue in effect until the earlier to occur of (a) the
termination of Executive's employment with the Company and the satisfaction of
both Parties' obligations pursuant to this Agreement, or (b) December 31, 2008.
17. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement to be effective as of the Effective Date.
THE COMPANY:
AMERIVEST PROPERTIES INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Secretary, AmeriVest Properties Inc.
EXECUTIVE:
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Individually
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