Exhibit 10(f)
CHANGE IN CONTROL AGREEMENT
AGREEMENT by and between EASTGROUP PROPERTIES, INC., a Maryland corporation
(the "Company"), with offices at 300 One Jackson Place, 188 East Capitol Street,
Jackson, Mississippi 39201-2195, and ____________________ (the "Executive"), an
individual residing at ____________________, dated as of the ___ day of
__________.
WHEREAS, the Company recognizes that the current business environment makes
it difficult to attract and retain highly qualified executives unless a certain
degree of security can be offered to such individuals against organizational and
personnel changes that frequently follow changes in control of an organization;
and
WHEREAS, even rumors of acquisitions or mergers may cause executives to
consider major career changes in an effort to assure financial security for
themselves and their families; and
WHEREAS, the Company desires to assure fair treatment of its executives in
the event of a Change in Control (as defined below) and to allow them to make
critical career decisions without undue time pressure and financial uncertainty,
thereby increasing their willingness to remain with the Company notwithstanding
the outcome of a possible Change in Control transaction; and
WHEREAS, the Company recognizes that its executives will be involved in
evaluating or negotiating any offers, proposals, or other transactions that
could result in Changes in Control of the Company and believes that it is in the
best interest of the Company and its stockholders for such executives to be in a
position, free from personal financial and employment considerations, to be able
to assess objectively and pursue aggressively the interests of the Company's
security holders in making these evaluations and carrying on such negotiations;
and
WHEREAS, the Board of Directors (the "Board") of the Company believes it is
essential to provide the Executive with compensation arrangements upon a Change
in Control that provide the Executive with individual financial security and
that are competitive with those of other corporations, and, in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.
NOW THEREFORE, the parties, for good and valuable consideration and
intending to be legally bound, agree as follows:
1. Operation and Term of Agreement. This Agreement shall be effective
immediately upon its execution. This Agreement may be terminated by the Company
upon six (6) months' advance written notice to the Executive; provided, however,
that after a Change in Control of the Company during the term of this Agreement,
this Agreement shall remain in effect until all of the obligations of the
parties under the Agreement are satisfied and the Protection Period (as defined
below) has expired. Prior to a Change in Control this Agreement shall
immediately terminate upon termination of the Executive's employment or upon the
Executive's ceasing to be an elected officer of the Company, except in the case
of such termination under circumstances set forth in Section 2(e) below.
2. Certain Definitions. The following words and phrases shall have the
meanings given for the purposes of this Agreement:
(a) "Cause" shall mean (i) the continued failure by the Executive to
perform his material responsibilities and duties toward the Company (other than
any such failure resulting from the Executive's incapacity due to physical or
mental illness); (ii) the engaging by the Executive in willful or reckless
conduct that is demonstrably injurious to the Company monetarily or otherwise;
(iii) the conviction of the Executive of a felony; or (iv) the commission or
omission of any act by the Executive that is materially inimical to the best
interests of the Company and that constitutes on the part of the Executive
common law fraud or malfeasance, misfeasance, or nonfeasance of duty; provided,
however, that "cause" shall not include the Executive's lack of professional
qualifications. For purposes of this Agreement, an act, or failure to act, on
the Executive's part shall be considered "willful" or "reckless" only if done,
or omitted, by him not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company. The Executive's
employment shall not be deemed to have been terminated for "cause" unless the
Company shall have given or delivered to the Executive (A) reasonable notice
setting forth the reasons for the Company's intention to terminate the
Executive's employment for "cause"; (B) a reasonable opportunity, at any time
during the 30-day period after the Executive's receipt of such notice, for the
Executive, together with his counsel, to be heard before the Board; and (C) a
Notice of Termination (as defined in Section 10 below) stating that, in the good
faith opinion of not less than a majority of the entire membership of the Board,
the Executive was guilty of the conduct set forth in clauses (i), (ii), (iii),
or (iv) of the first sentence of this Section 2(a).
(b) "Change in Control" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), whether or not the Company is then subject to such
reporting requirements; provided that, without limitation, a Change in Control
shall be deemed to have occurred if (i) any person (as such term is used in
section 13(d) and 14(d) of the Exchange Act) is or becomes beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30 percent or more of the combined voting
power of the Company's then outstanding securities; or (ii) during any period of
two consecutive years, the following persons (the "Continuing Directors") cease
for any reason to constitute a majority of the Board: individuals who at the
beginning of such period constitute the Board and new directors each of whose
election to the Board or nomination for election to the Board by the Company's
security holders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved; or (iii)
the security holders of the Company approve a merger or consolidation of the
Company with any other corporation, other than (A) a merger or consolidation
that would result in the voting securities of the Company outstanding
immediately before the merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities of such
surviving entity) a majority of the voting securities of the Company or of such
surviving entity outstanding immediately after such merger or consolidation or
(B) a merger of consolidation that is approved by a Board having a majority of
its members persons who are Continuing Directors, of which Continuing Directors
not less than two-thirds have approved the merger or consolidation; or (iv) the
security holders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Disability," for purposes of this Agreement, shall mean total
disability as defined in any long-term disability plan sponsored by the Company
in which the Executive participates, or, if there is no such plan or it does not
define such term, then Disability shall mean the physical or mental incapacity
of the Executive that prevents the Executive from substantially performing the
duties of the office or position to which the Executive was elected or appointed
by the Board for a period of at least 180 days, which incapacity is expected to
be permanent and continuous through the Executive's 65th birthday.
(e) The "Change in Control Date" shall be any date during the term of this
Agreement on which a Change in Control occurs. Notwithstanding any contrary
provision in this Agreement, if the Executive's employment or status as an
elected officer with the Company is terminated by the Company within six months
before the date on which a Change in Control occurs, and it is reasonably
demonstrated that such termination (i) was at the request of a third party who
has taken steps reasonably calculated or intended to effect a Change in Control
or (ii) otherwise arose in connection with or anticipation of a Change in
Control, then for the purposes of this Agreement the "Change in Control Date"
shall mean the date immediately before the date of such termination.
(f) "Good Reason" means:
(i) the assignment to the Executive within the Protection Period of
any duties inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements, authority,
duties, or responsibilities) or any other action that results in a
diminution in such position, authority, duties, or responsibilities
excluding for this purpose an isolated, insubstantial, and inadvertent
action that is not taken in bad faith and is remedied by the Company
promptly after receipt of notice given by the Executive;
(ii) a reduction by the Company in the Executive's base salary in
effect immediately before the beginning of the Protection Period or as
increased from time to time after the beginning of the Protection Period;
(iii) a failure by the Company to maintain plans providing benefits at
least as beneficial as those provided by any benefit or compensation plan
(including, without limitation, any incentive compensation plan, bonus
plan, or program, retirement, pension or savings plan, life insurance plan,
health and dental plan, or disability plan) in which the Executive is
participating immediately before the beginning of the Protection Period or
any action taken by the Company that would adversely affect the Executive's
participation in, or reduce the Executive's opportunity to benefit under,
any of such plans or deprive the Executive of any material fringe benefit
enjoyed by him immediately before the beginning of the Protection Period;
provided, however, that a reduction in benefits under the Company's
tax-qualified retirement, pension, or savings plans or its life insurance
plan, health and dental plan, disability plans, or other insurance plans,
which reduction applies generally to participants in the plans and has a de
minimis effect on the Executive shall not constitute "Good Reason" for
termination by the Executive;
(iv) the Company's requiring the Executive, without the Executive's
written consent, to be based at any office or location in excess of 50
miles from his office location immediately before the beginning of the
Protection Period, except for travel reasonably required in the performance
of the Executive's responsibilities;
(v) any purported termination by the Company of the Executive's
employment for Cause otherwise than as referred to in Section 10 of this
Agreement; or
(vi) any failure by the Company to obtain the assumption of the
obligations contained in this Agreement by any successor as contemplated in
Section 9(c) of this Agreement.
(g) "Parent" means any entity that directly or indirectly through one or
more other entities owns or controls more than 50 percent of the voting
securities or shares of common stock of the Company.
(h) "Protection Period" means the period beginning on the Change in Control
Date and ending on the last day of the eighteenth calendar month following the
Change in Control Date.
(i) "Subsidiary" means a company 50 percent or more of the voting
securities of which are owned, directly or indirectly, by the Company.
3. Benefits upon Termination under Certain Circumstances Within the
Protection Period. If the Executive's employment is terminated by the Company
during the Protection Period other than for Cause or Disability and other than
as a result of the Executive's death, or if the Executive terminates his
employment during the Protection Period for Good Reason, the Company shall,
subject to Section 7, pay to the Executive in a lump sum in cash within ten days
after the date of termination the aggregate of the following amounts and shall
provide the following benefits:
(a) The Executive's base salary and vacation pay (for vacation not taken)
accrued but unpaid through the date of termination of employment; and
(b) A lump sum severance payment in an amount equal to the product of 1.5
times the Executive's "Average Annual Compensation." For the purposes of this
Agreement, "Average Annual Compensation" shall be an amount equal to the annual
average of the sums of (i) the Executive's annual base salary from the Company
plus (ii) the amount of bonus accrued by the Company for the Executive, in each
case for the three calendar years that ended immediately before (or, if
applicable, coincident with) the Change in Control Date; and
(c) Within 30 days of the date of termination of employment, upon surrender
by the Executive of the outstanding options to purchase shares of common stock
of the Company ("Shares of Common Stock") granted to the Executive by the
Company (the "Outstanding Options") and any stock appreciation rights granted to
the Executive by the Company ("SARs"), an amount with respect to each
Outstanding Option and SAR (whether vested or not) equal to the difference
between the exercise price of such Outstanding Options and SARs and the higher
of (x) the fair market value of the Shares of Common Stock on the date of such
termination (but not less than the closing price for the Shares of Common Stock
on the New York Stock Exchange, or such other national stock exchange on which
such shares may be listed, on the last trading day such shares traded prior to
the date of termination); and (y) the highest price paid for Shares of Common
Stock or, in the cases of securities convertible into Shares of Common Stock or
carrying a right to acquire Shares of Common Stock, the highest effective price
(based on the prices paid for such securities) at which such securities are
convertible into Shares of Common Stock or at which Shares of Common Stock may
be acquired, by any person or group whose acquisition of voting securities has
resulted in a Change in Control of the Company; provided, however, that this
Section 3(c) shall not apply to the surrender of any Outstanding Option that is
an incentive stock option (within the meaning of section 422 of the Code); and
(d) The Company shall provide the Executive with life insurance coverage
and health plan coverage substantially comparable to the coverage the Executive
was receiving from the Company immediately before termination of employment; the
provision of such coverage will continue until the expiration of the 18-calendar
month period following the date of the termination of the Executive's
employment, or, if earlier, until the date on which the Executive becomes
eligible for comparable coverage in connection with subsequent employment,
provided, however, that if such coverage is not available under the plans
covering the Company's employees, the Company may, at its option, substitute for
the provision of such coverage monthly payments to the Executive for the same
period in an amount equal to the reasonable monthly cost of securing comparable
coverage for an individual of the Executive's age on a standard risk basis; and
(e) All of the Executive's benefits accrued under any supplemental
retirement plans, excess retirement plans, and deferred compensation plans
maintained by the Company or any of its Subsidiaries shall become immediately
vested in full; and
(f) All of the Executive's Outstanding Options shall become immediately
vested and exercisable in full.
4. Benefits on Voluntary Termination Within Six Months.
(a) If, during the period beginning on the Change in Control Date and
ending on the last day of the sixth calendar month following the Change in
Control Date, the Executive voluntarily terminates his employment with the
Company without Good Reason and other than for Disability, as a result of his
death, or in anticipation of a termination for Cause, then the Company shall,
subject to Section 7, make severance payments to the Executive for a period of
18 months beginning with the calendar month following the date of termination,
with each monthly payment equal to one-twelfth of the Executive's Average Annual
Compensation, subject to paragraph (b).
(b) If the Executive receives any remuneration in the form of wages,
salary, or consulting fees from another employer or income from self employment
(excluding investment income) for employment, services, or self-employment
during the 18-month severance pay period, the Company's obligation under
paragraph (a) above shall be reduced by one-half the amount of such
remuneration. For the purpose of this reduction, the Company's 18-month
severance pay obligation shall be considered as an aggregate amount. The
Executive shall report to the Company by the 15th day of each month after the
termination of his employment the amount of such remuneration the Executive
received during the preceding month, and the Executive shall deliver to the
Company a copy of his federal income tax return for each of the calendar years
containing a portion of the severance pay period.
(c) The Company shall, within 30 days of the termination of the Executive's
employment under circumstances described in paragraph (a), enter into an
agreement with a trustee and establish a trust for the purpose of assisting the
Company meet its obligation to the Executive under paragraph (a) and deposit
with the trustee an amount equal to the present value of the Company's
obligation to the Executive under paragraph (a) (disregarding paragraph (b)
solely for the purpose of the present value calculation) on that date. The trust
shall be a grantor trust, within the meaning of subchapter J, chapter 1,
subtitle A of the Code, of which the Company is grantor, and the assets of the
trust shall be subject to the claims of the Company's creditors in the event of
insolvency.
The Company shall remain liable to satisfy its obligations under paragraph
(a), which may be satisfied with the assets of the trust. The trust agreement
shall provide that all amounts remaining in the trust fund upon the satisfaction
of the Company's obligation to the Executive under paragraph (a) shall be
returned to the Company.
To the extent the Executive acquires a right to receive payments from the
Company under paragraph (a), the right shall be no greater than the right of any
unsecured creditor of the Company. The Company and Executive acknowledge it is
their intent and they agree that for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended, and for purposes of the Code
and for all other purposes, this Agreement and any trust the Company may
establish pursuant to this paragraph (c) constitute an unfunded arrangement
maintained for the purpose of providing compensation for an individual who is a
member of a select group of management or highly compensated employees.
5. 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 plans, practices, policies, or programs provided by the
Company or any of its Subsidiaries and for which the Executive may qualify, nor
shall anything in this Agreement limit or otherwise affect such rights as the
Executive may have under any stock option or other agreements with the Company
or any of its Subsidiaries. Any amount of vested benefit or any amount to which
the Executive is otherwise entitled under any plan, practice, policy, or program
of the Company or any of its Subsidiaries shall be payable in accordance with
the plan, practice, policy, or program; provided, however, that if the Executive
is entitled to benefits under Section 3 or 4, the Executive shall not be
entitled to severance pay, or benefits similar to severance pay, under any plan,
practice, policy, or program generally applicable to employees of the Company or
any of its Subsidiaries. The provision of severance pay or other benefits
pursuant to Section 3 or 4 shall not be deemed to be a continuance of the
Executive's employment for any purposes.
6. Full Settlement; No Obligation to Seek Other Employment; Legal Expenses.
The Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations under this Agreement shall not be affected
by any set-off, counterclaim, recoupment, defense, or other claim, right, or
action the Company may have against the Executive or others. The Executive shall
not be obligated to seek other employment or take any action other than as
provided in Section 4(b) by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. In the event the
Executive obtains a recovery or other relief against the Company, the Company
agrees to pay, upon written demand by the Executive, all legal fees and expenses
the Executive may reasonably incur as a result of any dispute or contest by or
with the Company or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement; if the Executive does not
obtain such recovery or relief against the Company, the Company shall pay
one-half of such fees and expenses. In any such action brought by the Executive
for damages or to enforce any provisions of this Agreement, the Executive shall
be entitled to seek both legal and equitable relief and remedies, including,
without limitation, specific performance of the Company's obligations under this
Agreement, in the Executive's sole discretion.
7. Cut Back in Benefits. Notwithstanding any other provision of this
Agreement, the cash lump sum payment and other benefits or severance pay
otherwise to be provided pursuant to Section 3 or 4 of this Agreement, as
applicable, (the "Severance Benefit") shall be reduced as described below if the
Company would, by reason of section 280G of the Code, not be entitled to deduct
for federal income tax purposes any part of the Severance Benefit or any part of
any other payment or benefit to which Executive is entitled under any plan,
practice, policy, or program. For the purposes of this Agreement, the Company's
independent auditors shall determine the value of any deferred payments or
benefits in accordance with the principles of section 280G of the Code, and tax
counsel selected by the Company's independent auditors and acceptable to the
Company shall determine the deductibility of payments and benefits to which the
Executive is entitled. The Severance Benefit shall be reduced only to the extent
required, in the opinion of such tax counsel, to prevent such nondeductibility
of any part of the remaining Severance Benefit and other payments and benefits
to which the Executive is entitled. The Company shall determine which elements
of the Severance Benefit shall be reduced to conform to the provisions of this
Section 7. Any determination made by the Company's independent auditors or by
tax counsel pursuant to this Section 7 shall be conclusive and binding on the
Executive.
8. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge, or data relating to the Company or any of its Subsidiaries, and their
respective businesses, obtained by the Executive during the Executive's
employment by the Company or any of its Subsidiaries and that has not become
public knowledge (other than by acts of the Executive or his representatives in
violation of this Agreement). After the date of termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company, communicate or divulge any such information, knowledge,
or data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 8 constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
9. Successors.
(a) This Agreement is personal to the Executive and shall not be assignable
by the Executive other than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives or successors in interest. The Executive may
designate a successor or successors in interest to receive any and all amounts
due the Executive under this Agreement after the Executive's death. A
designation of a successor in interest shall be made in writing, signed by the
Executive, and delivered to the Company pursuant to Section 13(b). This Section
9(a) shall not supersede any designation of beneficiary or successor in interest
made by the Executive or provided for under any other plan, practice, policy, or
program of the Company.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business or assets of the Company and any Parent of the Company or any
successor and without regard to the form of transaction utilized to acquire the
business or assets of the Company, to assume expressly 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 parentage had taken place. As
used in this Agreement, "Company" shall mean the Company as defined above and
any successor to its business or assets as aforesaid (and any Parent of the
Company or any successor) that is required by this clause to assume and agree to
perform this Agreement or that otherwise assumes and agrees to perform this
Agreement.
10. Notice of Termination. Any termination of the Executive's employment by
the Company for Cause or by the Executive for Good Reason shall be communicated
by Notice of Termination to the other party given in accordance with Section
13(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice that (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the date
of termination is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen days after the
giving of such notice). The failure by the Executive to set forth in the Notice
of Termination any fact or circumstance that contributes to a showing of Good
Reason shall not waive any right of the Executive under this Agreement or
preclude the Executive from asserting such fact or circumstance in enforcing his
rights.
11. Requirements and Benefits if Executive Is Employee of Subsidiary of
Company. If the Executive is an employee of any Subsidiary of the Company, he
shall be entitled to all of the rights and benefits of this Agreement as though
he were an employee of the Company and the term "Company" shall be construed to
include the Subsidiary by which the Executive is employed. The Company
guarantees the performance of its Subsidiary under this Agreement.
12. Dispute Resolution. The Company and the Executive shall attempt to
resolve between them any dispute that arises under this Agreement. If they
cannot agree within ten days after either party submits a demand for arbitration
to the other party, then the issue shall be submitted to arbitration with each
party having the right to appoint one arbitrator and those two arbitrators
mutually selecting a third arbitrator. The rules of the American Arbitration
Association for the arbitration of commercial disputes shall apply and the
decision of two of the three arbitrators shall be final. The arbitrators must
reach a decision within 60 days after the selection of the third arbitrator. The
arbitration shall take place in Jackson, Mississippi. The arbitrators shall
apply Mississippi law. The costs of such arbitration shall be shared equally by
the Executive and the Company.
13. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Mississippi, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the Agreement
and shall have no force or effect. This Agreement may be amended or modified
only by a written agreement executed by the parties or their respective
successors and legal representatives.
(b) All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, to the addresses
for each party as first written above or to such other address as either party
shall have furnished to the other in writing in accordance with this Section 13.
Notices and communications to the Company shall be addressed to the attention of
the Company's Corporate Secretary. Notice and communications shall be effective
when actually received by the addressee.
(c) Whenever reference is made in this Agreement to any specific plan or
program of the Company, to the extent that the Executive is not a participant in
the plan or program or has no benefit accrued under it, whether vested or
contingent, as of the Change in Control Date, then such reference shall be null
and void and the Executive shall acquire no additional benefit as a result of
such reference.
(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) The Company may withhold from any amounts payable under this Agreement
such federal, state, or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(f) The Company's or the Executive's failure to insist upon strict
compliance with any provision of this Agreement shall not be construed to be a
waiver of such provision or any other provision.
(g) Except in the case of termination of employment or elected officer
status under the circumstances set forth in Section 2(e) above, upon a
termination of the Executive's employment or upon the Executive's ceasing to be
an elected officer of the Company, in each case, prior to the Change in Control
Date, there shall be no further rights under this Agreement.
(h) This Agreement represents the full and complete understanding of the
parties with respect to the subject matter hereof and supersedes in its entirety
any prior agreement, oral or otherwise.
IN WITNESS WHEREOF, the Executive has set his hand to this Agreement and,
pursuant to the authorization from the Board, the Company has caused this
Agreement to be executed as of the day and year first above written.
EASTGROUP PROPERTIES, INC.
By:
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EXECUTIVE
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