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EXHIBIT 10.18
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is entered into as of the 6th day of
March, 1998, between Developers Diversified Realty Corporation, an Ohio
corporation (the "Company"), and Xxxxxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. EMPLOYMENT.
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(a) The Company hereby employs the Executive
as its Senior Vice President and Chief Operating Officer and the Executive
hereby accepts such employment, on the terms and subject to the conditions
hereinafter set forth.
(b) During the term of this Employment
Agreement and any renewal hereof (all references herein to the terms of this
Employment Agreement shall include references to the period of renewal hereof,
if any), the Executive shall be and have the titles of Senior Vice President and
Chief Operating Officer and shall devote all of his business time and all
reasonable efforts to his employment and perform diligently such duties as are
customarily performed by Chief Operating Officers of companies similar in size
to the Company, together with such other duties as may be reasonably requested
from time to time by the President of the Company or the Board of Directors of
the Company (the "Board"), which duties shall be consistent with his positions
as set forth above and as provided in Paragraph 2.
2. TERM AND POSITIONS.
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(a) Subject to the provisions for termination
hereinafter provided, the term of this Employment Agreement shall begin on April
1, 1998 and shall continue for the current "fiscal year" (as hereinafter
defined) and for the two immediately succeeding fiscal years. As of December 31,
2000, such term automatically shall be extended for the fiscal year commencing
January 1, 2001 and for each fiscal year thereafter, unless this Employment
Agreement is terminated by the Company with "cause" (as hereinafter defined) at
any time, or without cause upon not less than ninety days prior written notice.
The term "fiscal year" means the period beginning on the day after the Saturday
closest to January 1, in one year and ending on the Saturday closest to December
31 in the next year.
(b) The Executive shall be entitled to serve
as a Senior Vice President and the Chief Operating Officer of the Company. For
service as an officer and employee of the Company, the Executive shall be
entitled to the full protection of the applicable indemnification provisions of
the articles of incorporation and code of regulations of the Company, as the
same may be amended from time to time.
(c) If:
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(i) the Company materially changes the
Executive's duties and responsibilities as set forth
in Paragraphs 1(b) and 2(b) without his consent;
(ii) the Executive's place of employment or
the principal executive offices of the Company are
located more than fifty (50) miles from the
geographical center of Cleveland, Ohio;
(iii) there occurs a material breach by the
Company of any of its obligations under this
Employment Agreement, which breach has not been cured
in all material respects within thirty (30) days
after the Executive gives notice thereof to the
Company; or
(iv) there occurs a "change in control" (as
hereinafter defined) of the Company;
then in any such event the Executive shall have the right to terminate his
employment with the Company, but such termination shall not be considered a
voluntary resignation or termination of such employment or of this Employment
Agreement by the Executive but rather a discharge of the Executive by the
Company without "cause" (as defined in Paragraph 5(a)(ii)).
(d) The Executive shall be deemed not to have
consented to any written proposal calling for a material change in his duties
and responsibilities unless he shall give written notice of his consent thereto
to the Board within fifteen (15) days after receipt of such written proposal. If
the Executive shall not have given such consent, the Company shall have the
opportunity to withdraw such proposed material change by written notice to the
Executive given within ten (10) days after the end of said fifteen (15) day
period.
(e) The term "change in control" means the first
to occur of the following events:
(i) any person or group of commonly
controlled persons owns or controls, directly or
indirectly, fifty percent (50%) or more of the voting
control or value of the capital stock of the Company;
or
(ii) any person or group of commonly
controlled persons owning less than five percent (5%)
of the voting control or value of the capital stock
of the Company within 30 days following the
consummation of the initial public offering of the
Company's Common Shares owns or controls, directly or
indirectly, more than twenty percent (20%) of the
voting control or value of the capital stock of the
Company; or
(iii) the shareholders of the Company
approve an agreement to merge or consolidate with
another corporation or other entity resulting
(whether separately or in connection with a series of
transactions) in a change in ownership of twenty
percent (20%) or more of the voting control or value
of the capital stock of the Company, or an agreement
to sell or otherwise dispose of all or substantially
all of the Company's assets (including, without
limitation, a plan of liquidation or dissolution), or
otherwise approve of a fundamental alteration in the
nature of the Company's business.
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Notwithstanding the foregoing provisions of this Paragraph 2, the ownership of
capital stock by the Executive, Xxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxx X.
Xxxxxx and/or their respective affiliates shall not be deemed to result in a
"change in control" of the Company.
3. COMPENSATION.
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During the term of this Employment Agreement, the
Company shall pay or provide, as the case may be, to the Executive the
compensation and other benefits and rights set forth in this Paragraph 3.
(a) The Company shall pay to the Executive a
base salary payable in accordance with the Company's usual pay practices (and in
any event no less frequently than monthly) of Three Hundred Thousand Dollars
($300,000) per annum.
(b) The Company shall pay to the Executive bonus
compensation for each fiscal year of the Company, not later than 90 days
following the end of each fiscal year or the termination of the employment, as
the case may be, prorated on a per diem basis for partial fiscal years,
determined and calculated in a manner set forth on Exhibit A attached hereto.
(c) The Company shall provide to the Executive
such life, medical, hospitalization and dental insurance for himself, his spouse
and eligible family members as may be determined by the Board to be consistent
with industry standards.
(d) The Executive shall participate in all
retirement and other benefit plans of the Company generally available from time
to time to employees of the Company and for which the Executive qualifies under
the terms thereof (and nothing in this Agreement shall or shall be deemed to in
any way effect the Executive's rights and benefits thereunder except as
expressly provided herein).
(e) The Executive shall be entitled to such
periods of vacation and sick leave allowance each year as are determined by the
President of the Company in his reasonable and good faith discretion, which in
any event shall be not less than as provided under the Company's vacation and
sick leave policy for executive officers.
(f) The Executive shall be entitled to
participate in any equity or other employee benefit plan that is distinguished
from general management, of the Company. The Executive's participation in and
benefits under any such plan shall be on the terms and subject to the conditions
specified in the governing document of the particular plan.
(g) The Company shall reimburse the Executive
or provide him with an expense allowance during the term of this Employment
Agreement for travel, entertainment and other expenses, including, without
limitation, the dues charged by The Union Club Company from time to time,
reasonably and necessarily incurred by the Executive in connection with the
Company's business. The Executive shall furnish such documentation with respect
to reimbursement to be paid hereunder as the Company shall reasonably request.
4. PAYMENT IN THE EVENT OF DEATH OR PERMANENT
DISABILITY.
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(a) In the event of the Executive's death or
"permanent disability" (as hereinafter defined) during the term of this
Employment Agreement, the Company shall pay to the Executive (or his successors
and assigns in the event of his death) an amount equal to two (2) times the
Executive's then effective per annum rate of salary, as determined under
Paragraph 3(a), plus a pro rata
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portion of the bonus applicable to the fiscal year in which such death or
permanent disability occurs, as such bonus is determined under paragraph 3(b).
(b) The pro rata portion of the bonus described
in Paragraph 4(a) shall be paid when and as provided in Paragraph 3(b). The
remainder of the benefit to be paid pursuant to Paragraph 4(a) shall be paid
within ninety (90) days after the date of death or permanent disability, as the
case may be.
(c) Except as otherwise provided in Paragraphs
3(d) and 4(a), in the event of the Executive's death or permanent disability the
Executive shall be entitled to no further compensation or other benefits under
this Employment Agreement, except as to that portion of any unpaid salary and
other benefits accrued and earned by him hereunder up to and including the date
of such death or permanent disability, as the case may be.
(d) For purposes of this Employment Agreement,
the Executive's "permanent disability" shall be deemed to have occurred after
one hundred twenty (120) days in the aggregate during any consecutive twelve
(12) month period, or after ninety (90) consecutive days, during which one
hundred twenty (120) or ninety (90) days, as the case may, the Executive, by
reason of his physical or mental disability or illness, shall have been unable
to discharge his duties under this Employment Agreement. The date of permanent
disability shall be such one hundred twentieth (120th) or ninetieth (90th) day,
as the case may be. In the event either the Company or the Executive, after
receipt of notice of the Executive's permanent disability from the other,
dispute that the Executive's permanent disability shall have occurred, the
Executive shall promptly submit to a physical examination by the chief of
medicine of any major accredited hospital in the Cleveland, Ohio, area and,
unless such physician shall issue his written statement to the effect that in
his opinion, based on his diagnosis, the Executive is capable of resuming his
employment and devoting his full time and energy to discharging his duties
within thirty (30) days after the date of such statement, such permanent
disability shall be deemed to have occurred.
5. TERMINATION.
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(a) The employment of the Executive under this
Employment Agreement, and the terms hereof, may be terminated by the Company:
(i) on the death or permanent
disability (as previously defined) of the Executive, or
(ii) for cause at any time by action of
the Board. For purposes hereof, the term "cause" shall mean:
(A) The Executive's fraud,
commission of a felony or of an act or series of acts
which result in material injury to the business
reputation of the Company, commission of an act or
series of repeated acts of dishonesty which are
materially inimical to the best interests of the
Company, or the Executive's willful and repeated
failure to perform his duties under this Employment
Agreement, which failure has not been cured within
fifteen (15) days after the Company gives notice
thereof to the Executive; or
(B) The Executive's material breach
of any material provision of this Employment
Agreement, which breach has not been cured in all
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substantial respects within ten (10) days after the
Company gives notice thereof to the Executive.
The exercise by the Company of its rights of termination under
this Paragraph 5 shall be the Company's sole remedy in the
event of the occurrence of the event as a result of which such
right to terminate arises. Upon any termination of this
Employment Agreement, the Executive shall be deemed to have
resigned from all offices and directorships held by the
Executive in the Company.
(b) In the event of a termination claim by the
Company to be for "cause" pursuant to Paragraph 5(a)(ii), the Executive shall
have the right to have the justification for said termination determined by
arbitration in Cleveland, Ohio. In order to exercise such right, the Executive
shall serve on the Company within thirty (30) days after termination a written
request for arbitration. The Company immediately shall request the appointment
of an arbitrator by the American Arbitration Association and thereafter the
question of "cause" shall be determined under the rules of the American
Arbitration Association, and the decision of the arbitrator shall be final and
binding upon both parties. The parties shall use all reasonable efforts to
facilitate and expedite the arbitration and shall act to cause the arbitration
to be completed as promptly as possible. During the pendency of the arbitration,
the Executive shall continue to receive all compensation and benefits to which
he is entitled hereunder, and if at any time during the pendency of such
arbitration the Company fails to pay and provide all compensation and benefits
to the Executive in a timely manner the Company shall be deemed to have
automatically waived whatever rights it then may have had to terminate the
Executive's employment for cause. Expenses of the arbitration shall be borne
equally by the parties.
(c) In the event of termination for any of the
reasons set forth in subparagraph (a) of this Paragraph 5, except as otherwise
provided in Paragraphs 3(d) and 4(a), the Executive shall be entitled to no
further compensation or other benefits under this Employment Agreement, except
as to that portion of any unpaid salary and other benefits accrued and earned by
him hereunder up to and including the effective date of such termination.
6. COVENANTS AND CONFIDENTIAL INFORMATION.
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(a) The Executive acknowledges the Company's
reliance and expectation of the Executive's continued commitment to performance
of his duties and responsibilities during the term of this Employment Agreement.
In light of such reliance and expectation on the part of the Company, during the
term of this Employment Agreement and for a period of two (2) years thereafter
(and, as to clause (ii) of this subparagraph (a), at any time during and after
the term of this Employment Agreement), the Executive shall not, directly or
indirectly, do or suffer either of the following:
(i) Own, manage, control or participate in
the ownership, management or control, or be employed or
engaged by or otherwise affiliated or associated as a
consultant, independent contractor or otherwise with, any
other corporation, partnership, proprietorship, firm,
association or other business entity engaged in the business
of, or otherwise engage in the business of, acquiring, owning,
developing or managing commercial shopping centers; provided,
however, that the ownership of not more than one percent (1%)
of any class of publicly traded securities of any entity shall
not be deemed a violation of this covenant; or
(ii) Disclose, divulge, discuss, copy or
otherwise use or suffer to be used in any manner, in
competition with, or contrary to the interests of, the
Company, any confidential information relating to the
Company's operations, properties or
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otherwise to its particular business or other trade secrets of
the Company, it being acknowledged by the Executive that all
such information regarding the business of the Company
compiled or obtained by, or furnished to, the Executive while
the Executive shall have been employed by or associated with
the Company is confidential information and the Company's
exclusive property; provided, however, that the foregoing
restrictions shall not apply to the extent that such
information (A) is clearly obtainable in the public domain,
(B) becomes obtainable in the public domain, except by reason
of the breach by the Executive of the terms hereof, (C) was
not acquired by the Executive in connection with his
employment or affiliation with the Company or with Price
Waterhouse LLP, (D) was not acquired by the Executive from the
Company or its representatives or (E) is required to be
disclosed by rule of law or by order of a court or
governmental body or agency.
(b) The Executive agrees and understands that
the remedy at law for any breach by him of this Paragraph 6 will be inadequate
and that the damages following from such breach are not readily susceptible to
being measured in monetary terms. Accordingly, it is acknowledged that, upon
adequate proof of the Executive's violation of any legally enforceable provision
of this Paragraph 6, the Company shall be entitled to immediate injunctive
relief and may obtain a temporary order restraining any threatened or further
breach. Nothing in this Paragraph 6 shall be deemed to limit the Company's
remedies at law or in equity for any breach by the Executive of any of the
provisions of this Paragraph 6 which may be pursued or availed of by the
Company.
(c) The Executive has carefully considered the
nature and extent of the restrictions upon him and the rights and remedies
conferred upon the Company under this Paragraph 6, and hereby acknowledges and
agrees that the same are reasonable in time and territory, are designed to
eliminate competition which otherwise would be unfair to the Company, do not
stifle the inherent skill and experience of the Executive, would not operate as
a bar to the Executive's sole means of support, are fully required to protect
the legitimate interests of the Company and do not confer a benefit upon the
Company disproportionate to the detriment to the Executive.
7. TAX ADJUSTMENT PAYMENTS. If all or any portion of the
amounts payable to the Executive under this Employment Agreement (together with
all other payments of cash or property, whether pursuant to this Employment
Agreement or otherwise, including, without limitation, the issuance of common
stock of the Company, or the granting, exercise or termination of options
therefor) constitutes "excess parachute payments" within the meaning of Section
280G of the Code that are subject to the excise tax imposed by Section 4999 of
the Code (or any similar tax or assessment), the amounts payable hereunder shall
be increased to the extent necessary to place the Executive in the same
after-tax position as he would have been in had no such tax assessment been
imposed on any such payment paid or payable to the Executive under this
Employment Agreement or any other payment that the Executive may receive in
connection therewith. The determination of the amount of any such tax or
assessment and the incremental payment required hereby in connection therewith
shall be made by the accounting firm employed by the Executive within thirty
(30) calendar days after such payment and said incremental payment shall be made
within five (5) calendar days after determination has been made. If, after the
date upon which the payment required by this Paragraph 7 has been made, it is
determined (pursuant to final regulations or published rulings of competent
jurisdiction, Internal Revenue Service audit assessment or otherwise) that the
amount of excise or other similar taxes or assessments payable by the Executive
is greater than the amount initially so determined, then the Company shall pay
the Executive an amount equal to the sum of: (i) such additional excise or other
taxes, plus (ii) any interest, fines and penalties resulting from such
underpayment, plus (iii) an excise or other tax assessment payable by the
Executive with respect to the amounts specified in (i) and (ii) above, and the
reimbursement provided by this clause
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(iii), in the manner described above in this Paragraph 7. Payment thereof shall
be made within five (5) calendar days after the date upon which such subsequent
determination is made.
8. MISCELLANEOUS.
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(a) The Executive represents and warrants that
he is not a party to any agreement, contract or understanding, whether
employment or otherwise, which would restrict or prohibit him from undertaking
or performing employment in accordance with the terms and conditions of this
Employment Agreement.
(b) The provisions of this Employment Agreement
are severable and if any one or more provision may be determined to be illegal
or otherwise unenforceable, in whole or in part, the remaining provision and any
partially unenforceable provision to the extent enforceable in any jurisdiction
nevertheless shall be binding and enforceable.
(c) The rights and obligations of the Company
under this Employment Agreement shall inure to the benefit of, and shall be
binding on, the Company and its successors and assigns, and the rights and
obligations (other than obligations to perform services) of the Executive under
this Employment Agreement shall inure to the benefit of, and shall be binding
upon, the Executive and his heirs, personal representatives and assigns.
(d) Any controversy or claim arising out of or
relating to this Employment Agreement, or the breach thereof, shall be settled
by arbitration in accordance with the Rules of the American Arbitration
Association then pertaining in the City of Cleveland, Ohio, and judgment upon
the award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. The arbitrator or arbitrators shall be deemed to
possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration; provided, however, that nothing in this
Paragraph 8(d) shall be construed so as to deny the Company the right and power
to seek and obtain injunctive relief in a court of equity for any breach or
threatened breach by the Executive of any of his covenants contained in
Paragraph 6 hereof.
(e) Any notice to be given under this Employment
Agreement shall be personally delivered in writing or shall have been deemed
duly given when received after it is posted in the United States mail, postage
prepaid, registered or certified, return receipt requested, and if mailed to the
Company, shall be addressed to its principal place of business, attention:
General Counsel, and if mailed to the Executive, shall be addressed to him at
his home address last known on the records of the Company, or at such other
address or addresses as either the Company or the Executive may hereafter
designate in writing to the other.
(f) The failure of either party to enforce any
provision or provisions of this Employment Agreement shall not in any way be
construed as a waiver of any such provision or provisions as to any future
violations thereof, nor prevent that party thereafter from enforcing each and
every other provision of this Employment Agreement. The rights granted the
parties herein are cumulative and the waiver of any single remedy shall not
constitute a waiver of such party's right to assert all other legal remedies
available to it under the circumstances.
(g) This Employment Agreement supersedes all
prior agreements and understandings between the parties and may not be modified
or terminated orally. No modification, termination or attempted waiver shall be
valid unless in writing and signed by the party against whom the same is sought
to be enforced.
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(h) This Employment Agreement shall be governed
by and construed according to the laws of the State of Ohio.
(i) Captions and paragraph headings used herein
are for convenience and are not a part of this Employment Agreement and shall
not be used in construing it.
(j) Where necessary or appropriate to the
meaning hereof, the singular and plural shall be deemed to include each other,
and the masculine, feminine and neuter shall be deemed to include each other.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement on the day and year first set forth herein.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
Authorized Officer
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
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