EXHIBIT 10C
SEVERANCE AGREEMENT
as Restated
THIS AGREEMENT by and between Sizeler Property Investors, Inc., a Delaware
corporation qualified as a real estate investment trust ("SPI"), with principal
offices at 2542 Williams Boulevard, Kenner, Louisiana, and James W. Brodie, an
individual residing in _________, Louisiana ("Executive"), first dated as of
February 9, 1994, and as amended and restated as of August 3, 2000.
R E C I T A L S
A. SPI entered into an agreement with Executive dated February 9, 1994
(the "Original Agreement").
B. Before entering into the Original Agreement, the Board of Directors of
SPI (the "Board") had considered the potential for adverse effects on SPI and on
the work environment and executive morale were there a proposal for a change in
control of SPI, and the intent of the Original Agreement was to reinforce and
encourage Executive's continued attention and devotion to his duties without
distraction notwithstanding such a proposal.
C. The Board has reviewed the Original Agreement and determined that it
is in the best interests of SPI and its shareholders and in furtherance of the
intent of the Original Agreement to amend the Original Agreement through this
restatement.
D. Executive has agreed to this amendment and restatement of the Original
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth
below, SPI and Executive agree as follows:
1. Employment. SPI shall continue to employ Executive, and Executive shall
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remain in the employ of SPI, under the terms set forth in this agreement.
2. Responsibilities. SPI shall employ Executive, and Executive shall serve
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SPI, during the term of this Agreement in such executive capacity as may be
specified from time to time by the Board. Executive shall, during the term of
this agreement, devote his full time and attention to and exert his best efforts
in the performance of his duties toward SPI, provided, however, that with the
approval of the Board, Executive may serve on the board of directors or
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trustees of, or hold other positions with respect to, Sizeler Realty Co., Inc.
("SRC"), and other companies and organizations.
3. Term. The initial term of this agreement shall begin on August 3, 2000
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and end on August 31, 2002. On October 1, 2000, and on the first day of each
following month, the term of this agreement shall automatically be extended to
the end of the 24-month period beginning on such date. Notwithstanding the
preceding provisions of this paragraph, this agreement may be terminated at any
time in accordance with the provisions of paragraph 5 or 6 below.
4. Compensation. Except as provided in paragraphs 5 and 6 below, SPI shall
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pay to Executive as compensation for his services under this agreement a base
salary at the annual rate of not less than $165,000, in accordance with the
customary payroll practices of SPI, for the term of this agreement. As used in
this agreement, the term "base salary" shall mean the amount stated in the
preceding sentence or such greater amount as the Board may, from time to time,
designate as Executive's base salary. Executive may participate in such bonus,
stock option, deferred compensation, employee benefit, and fringe benefit plans
or arrangements as the Board may from time to time determine.
5. Termination of Agreement.
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5.1 General. This agreement may be terminated at any time under the
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following terms except to the extent paragraph 6, with respect to a Change in
Control, is applicable. Any termination of this agreement under this paragraph 5
shall be subject to the provisions of paragraphs 5.2, 8, 10, and 15, which shall
survive the termination.
5.1.1 Without Cause. Executive serves as an officer and
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executive of SPI at the pleasure of the Board.
5.1.1(A) The Chairman of the Board, the Chief Executive
Officer, or the Board may terminate Executive's employment with SPI and this
agreement at any time without a determination of Cause (as defined below), by
written notice to Executive.
5.1.1(B) The Chairman of the Board, the Chief Executive
Officer, or the Board may terminate this agreement at any time without a
determination of Cause and without requiring the termination of Executive's
employment with SPI, by written notice to Executive.
5.1.2 Cause. Upon a determination by the Chairman of the
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Board, the Chief Executive Officer, or the Board that Executive has breached or
neglected his duties to SPI (such conduct by Executive being referred to in this
agreement as "Cause"), the Chairman of the Board, the Chief Executive Officer,
or the Board may terminate Executive's employment with SPI and this agreement by
written notice to Executive.
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5.1.3 Death. This agreement shall terminate upon Executive's
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death.
5.1.4 Disability. Upon a determination by the Chairman of the
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Board, the Chief Executive Officer, or the Board that Executive is unable to
perform his duties to SPI under this agreement by reason of illness or other
incapacity that will qualify Executive for benefits under any long term
disability arrangement or policy maintained with respect to Executive's
employment with SPI (such condition of Executive being referred to in this
agreement as "Disability"), the Chairman of the Board, the Chief Executive
Officer, or the Board may terminate Executive's employment with SPI and this
agreement by written notice to Executive.
5.1.5 Voluntary Resignation. Executive may terminate this
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agreement at any time by submitting his resignation with at least 30 days prior
written notice to the Board.
5.2 Obligations upon Termination.
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5.2.1 Without Cause.
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5.2.1(A) Should SPI terminate this agreement without
Cause in accordance with paragraph 5.1.1 above, SPI shall pay to Executive an
amount equal to the base salary that would have been payable under paragraph 4
for the 24-month period beginning on the date of termination of this agreement,
at the rate in effect on the date of termination and at the times such salary
would otherwise have been payable. Furthermore, Executive shall continue to
participate for such 24-month period in any life, disability, accident and
health insurance benefits substantially similar to those Executive was receiving
or entitled to receive from SPI immediately before notice of termination or, at
SPI's option, such life, disability, accident and health insurance benefits as
may be generally in effect for executives of SPI during that period. In the case
of a termination under paragraph 5.1.1(B), the provisions of this paragraph
shall be applicable whether or not Executive's employment with SPI continues.
5.2.1(B) Should SPI terminate this agreement without
Cause and without requiring the termination of Executive's employment under
paragraph 5.1.1(B), and should SPI and Executive agree upon terms regarding the
continuation of Executive's employment with SPI, such terms whether written or
oral shall be subject (i) to paragraph 5.2.1(A) above, and (ii), if the
termination of this agreement occurs within 24 months after a Change in Control
(as defined in paragraph 6 below), to the survival of paragraphs 6 and 7, below,
unless Executive specifically waives such provisions.
5.2.2 With Cause or Voluntary Resignation. Should SPI
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terminate this agreement with Cause in accordance with paragraph 5.1.2 above, or
should the agreement terminate upon Executive's voluntary resignation in
accordance with paragraph 5.1.5
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above, SPI shall pay Executive's base salary through the date of termination at
the rate in effect immediately before the earlier of the date of termination or
notice of termination or resignation and shall pay any amounts to which
Executive is entitled at date of termination under any compensation plans,
programs, or other agreements then in effect, and SPI shall have no further
obligations to Executive under this agreement.
5.2.3 Upon Death.
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5.2.3(A) Should this agreement terminate upon
Executive's death in accordance with paragraph 5.1.3 above, SPI shall pay a
death benefit to Executive's designated beneficiary or beneficiaries or, if
Executive has not designated a beneficiary or no designated beneficiary survives
Executive, to the executor or administrator of Executive's estate. The death
benefit shall equal the base salary that would have been payable to Executive
under paragraph 4 for the 24-month period beginning on the date of Executive's
death, at the rate in effect on such date and at the times such salary would
otherwise have been payable.
5.2.3(B) Executive may designate a beneficiary or
beneficiaries for purposes of this agreement. The designation of beneficiary
shall be made in writing, shall not be effective unless filed with the Secretary
of SPI before Executive's death, and may be changed or revoked at any time
without notice to any beneficiary by the filing of a subsequent designation with
the Secretary. If Executive designates more than one beneficiary, each shall
share equally unless Executive specifies a different allocation or preference.
5.2.4 Upon Disability. Should SPI terminate this agreement on
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account of Executive's Disability in accordance with paragraph 5.1.4 above, SPI
shall pay to Executive an amount equal to the difference between (i) the base
salary that would have been payable under paragraph 4 for the 24-month period
beginning on the date of termination at the rate in effect on the date of
termination and at the time such salary would otherwise have been payable, and
(ii) the amount payable to Executive during such period under any long term
disability arrangement or insurance policy maintained with respect to
Executive's employment with SPI, except that SPI's obligation to pay such amount
shall cease to the extent that payment by SPI would reduce the amount payable to
Executive under any long term disability arrangement or insurance policy.
6. Change in Control.
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6.1 Definitions. For the purposes of this paragraph 6 and
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paragraph 7, the following definitions shall apply:
6.1.1 "Adverse Circumstances" shall mean any of the following
sets of circumstances surrounding the termination of Executive's employment with
SPI after a Change in Control:
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6.1.1(A) The termination or notice of termination of
Executive's employment with SPI without Breach of Duty.
6.1.1(B) The assignment to Executive of any duties
inconsistent with his status as an executive of SPI, the removal of Executive
from the position he held before the Change in Control of SPI, or a substantial
diminution in the nature or status of Executive's responsibilities from those in
effect immediately before the Change in Control.
6.1.1(C) A reduction by SPI in Executive's annual base
salary as in effect on the date immediately before the Change in Control or as
the same may be increased from time to time.
6.1.1(D) Either the relocation of the executive office
of SPI or the relocation of Executive's individual office in Kenner, Louisiana,
to a location outside of the New Orleans Standard Metropolitan Statistical Area
(SMSA) so as to require Executive to be based anywhere other than in the New
Orleans SMSA except for required travel on the business of SPI and its
Subsidiaries to an extent substantially consistent with Executive's present
business travel obligations.
6.1.2 "Breach of Duty" shall mean a determination by two-thirds
of SPI's Continuing Directors of Executive's willful breach of duty in the
course of his employment that is demonstrably and materially injurious to SPI,
monetarily or otherwise, or that Executive neglected his employment duties. For
purposes of this paragraph 6, no act, or failure to act, on Executive's part
shall be deemed willful unless done, or omitted to be done, in bad faith and
without Executive's reasonable belief that the action or omission was in the
best interest of SPI. Notwithstanding the foregoing, Executive's employment
shall not be deemed to have terminated for Breach of Duty unless and until there
shall have been delivered to him a copy of a resolution duly adopted by the
requisite vote of the Continuing Directors at a meeting of the Continuing
Directors called and held for such purpose (after reasonable notice to Executive
and an opportunity for Executive, together with counsel, to be heard before the
Continuing Directors), finding that in the good faith opinion of the Continuing
Directors Executive was guilty of conduct set forth above in this paragraph
6.1.2 and specifying the particulars of such conduct in detail.
6.1.3 "Change in Control" shall mean:
6.1.3(A) On or after the date of execution of this
agreement, any person (which, for all purposes this paragraph 6, shall include,
without limitation, an individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate and a trustee, executor, administrator or
other legal representative) (a "Person") or any group of two or more Persons
acting in concert who or that becomes the beneficial owner, directly or
indirectly, of securities of SPI representing, or acquires the right to control
or direct, or to acquire through the conversion of securities or the exercise of
warrants or other rights to acquire securities, 25 percent or more of
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the combined voting power of SPI's then outstanding securities; provided that
for the purposes of this agreement, (i) "voting power" means the right to vote
for the election of directors, and (ii) any determination of percentage of
combined voting power shall be made on the basis that all securities
beneficially owned by the Person or group or over which control or direction is
exercised by the Person or group that are convertible into securities carrying
voting rights have been converted (whether or not then convertible) and all
options, warrants, or other rights that may be exercised to acquire securities
beneficially owned by the Person or group or over which control or direction is
exercised by the Person or group have been exercised (whether or not then
exercisable), and no such convertible securities have been converted by any
other Person and no such options, warrants, or other rights have been exercised
by any other Person and provided further that "Person" shall not include SPI,
any Subsidiary of SPI, any employee benefit plan of SPI or any Subsidiary of
SPI, any entity holding shares of Common Stock organized, appointed, or
established by SPI or any of its Subsidiaries for or pursuant to the terms of
any such plan, Sidney W. Lassen, together with his spouse, descendants, and any
trust established for the benefit of Sidney W. Lassen, his spouse, and
descendants or any one or more of them, or SRC; or
6.1.3(B) at any time subsequent to the date of execution
of this agreement there shall be elected or appointed to the Board any director
or directors whose appointment or election to the Board or nomination for
election by SPI's stockholders was not approved by a vote of at least a majority
of the directors then in office who were directors on the date of execution of
this agreement or whose election or appointment or nomination for election was
previously so approved ("Continuing Directors"); or
6.1.3(C) a reorganization, merger, consolidation,
combination, corporate restructuring, or similar transaction (an "Event"), in
each case, in respect of which the beneficial owners of the outstanding SPI
voting securities immediately prior to such Event do not, following such Event,
beneficially own, directly or indirectly, more than 50 percent of the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors of SPI and any resulting Parent in
substantially the same proportions as their ownership, immediately prior to such
Event, of the outstanding SPI voting securities.
6.1.4 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
6.1.5 "Common Stock" shall mean the common stock, par value
$.01 per share, of SPI.
6.1.6 "Continuing Director" shall have the meaning given in
paragraph 6.1.3(B).
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6.1.7 "Parent" shall mean any entity that directly or
indirectly through one or more entities owns or controls more than 50 percent of
the voting stock or Common Stock of SPI.
6.1.8 "Subsidiary" shall mean any entity 50 percent or more of
the equity securities of which is owned or controlled, directly or indirectly,
by SPI.
6.2 Effect of Change in Control. Paragraph 6.3 shall apply to
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determine SPI's and Executive's rights and obligations under this agreement if
Executive's employment with SPI terminates other than by reason of death or
Disability (as defined in paragraph 5.1.4) within 24 months following a Change
of Control of SPI and either (i) this agreement has not been terminated before
such termination of employment, or (ii) SPI had terminated this agreement under
paragraph 5.1.1(B) coincident with or following the Change in Control.
6.3 Rights and Obligations upon Termination of Employment Other
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Than by Reason of Death or Disability Following a Change in Control of SPI. The
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following provisions shall apply under the circumstances described in paragraph
6.2:
6.3.1 Should SPI terminate Executive's employment for Breach of
Duty or should Executive's employment with SPI terminate under circumstances
other than those described above as Adverse Circumstances, SPI shall pay
Executive's base salary through the date of termination of employment at the
rate in effect at the time notice of termination is given and shall pay any
amounts to which Executive is entitled at date of termination of employment
under any other compensation plans, programs, or agreements then in effect, and
SPI shall have no further obligations to Executive under this agreement.
6.3.2 Should Executive's employment with SPI terminate under
circumstances described above as Adverse Circumstances, then Executive shall be
entitled to the payments and benefits described in paragraphs 6.3.2(A) through
6.3.2(E) (the "Severance Benefit") and in paragraph 7, in lieu of any other
rights or benefits under this agreement.
6.3.2(A) SPI shall pay to Executive his base salary
through the date of termination of employment at the rate in effect at the time
notice of termination is given plus an amount of Executive's normative bonus or
award under the incentive plan in effect for the fiscal year in which the date
of termination occurs, which amount shall be proportionate to the part of the
fiscal year elapsed by the date of termination. If the incentive plan is based
on a measure of performance such as funds from operations, the normative bonus
shall be based on projected performance for the fiscal year in which the date of
termination occurs, which, for the purposes of this paragraph 6, shall be
calculated by annualizing actual performance measured to the date immediately
preceding the date of termination or, if the date of termination occurs in the
same year as the Change in Control and if it would result in a larger amount
payable, by annualizing actual performance measured to the date immediately
preceding the Change in Control. Payment shall be made no later than the fifth
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business day following the date of termination. SPI shall also pay to Executive
all other amounts to which Executive is entitled at the date of termination of
employment under any compensation plans, programs, or agreements then in effect.
For purposes of this agreement, a "business day" means a day that is not a
Saturday, Sunday, or legal holiday on which banks may remain closed in New
Orleans, Louisiana.
6.3.2(B) SPI shall also pay to Executive a severance
payment (the "Severance Payment") that will equal three times the total of: (i)
the base annual salary payable to Executive at the rate in effect on the date of
Change in Control or notice of termination of employment, whichever is greater,
(ii) one-half of the total amount that was, during the 24-month period preceding
the Change in Control or date of termination, whichever is greater, credited to
Executive as a nonelective deferral under any deferred compensation arrangement
between SPI and Executive, (iii) one-half of the total amount of any bonuses or
awards paid to Executive as an employee of SPI during the 24-month period
preceding the date of Change in Control or date of termination, whichever is
greater, including any bonus or award paid in the forms of shares of Common
Stock of SPI, but excluding any bonus or award paid in the form of options
relating to securities of SPI; and (iv) the amount SPI would contribute for
Executive for a full year to the qualified defined contribution plans maintained
by SPI as in effect immediately before the Change in Control (or, if it would
result in a larger amount payable, immediately before the date of termination),
assuming Executive's pay for the year were equal to the sum of the base salary
taken into account under clause (i) plus the amount of bonus or award taken into
account under clause (iii), and Executive elected to make the maximum deferral
contribution allowable under the plans for the year (without regard to the
actual deferral percentage test). For the purposes of the preceding sentence,
shares of Common Stock of SPI shall be taken into account at their value on the
date of the bonus or award as determined under the terms of the plan under which
the bonus or award was paid or, if the plan does not provide for such a
valuation, as determined in good faith by the Board of Directors of SPI; and if
Executive was not in the employ of SPI for a full 24 months preceding the date
of termination, the amounts taken into account under clauses (ii) and (iii) of
the preceding sentence shall be, rather than one-half of the 24 month total, the
full amount paid or credited, as applicable, during the 12 month period
preceding the Change in Control or date of termination, whichever is greater
under the given case. SPI shall pay the Severance Payment in a lump sum no later
than the fifth business day following the date of termination.
6.3.2(C) SPI shall also pay to Executive an amount equal
to all reasonable legal fees and expenses incurred by Executive as a result of
such termination (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this agreement, whether or not Executive is
successful).
6.3.2(D) SPI shall arrange to provide Executive with
life, disability, accident, and health insurance benefits substantially similar
to those Executive was receiving or entitled to receive from SPI immediately
before termination (including, if applicable, family health insurance coverage);
such provision shall continue until the expiration
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of the 36-month period following the date of termination of Executive's
employment or until, if earlier, the date upon which Executive becomes eligible
for comparable benefits in connection with subsequent employment. If such
coverage is not available under plans maintained by SPI, SPI shall reimburse
Executive for his reasonable cost of securing comparable coverage, up to a
maximum of $30,000 per year for health insurance coverage and $20,000 per year
for all other coverage; to the extent such reimbursement results in taxable
income for Executive in excess of the taxable income Executive would have
recognized upon receipt of the underlying benefits as an employee of SPI (the
"Excess Taxable Income"), SPI shall pay to Executive an additional amount equal
to the income and payroll tax liability Executive incurs with respect to the
Excess Taxable Income and his receipt of the additional amount. SPI shall pay
the additional amount with respect to Excess Taxable Income for a given calendar
year no later than the January 10 following that year.
6.3.2(E) SPI shall pay or reimburse Executive for his
reasonable expenses not in excess of $20,000 incurred in his employment search,
which may include rental of an office, secretarial support, photocopying,
telephone, and other miscellaneous expenses and fees of an employment search
advisor; provided however, SPI shall not pay or reimburse Executive for expenses
incurred after the earlier of the month in which Executive secures employment
and the 24/th/ month following the date of termination.
6.4 Termination of Agreement; Survival of Certain Terms. To the
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extent it has not terminated earlier under paragraph 5.1.1(B), this agreement
shall terminate on the date of the termination of Executive's employment under
circumstances to which this paragraph 6 applies, subject to the survival of the
provisions of paragraphs 6.3, 8, 10, and 15.
7. Certain Additional Payments by SPI.
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7.1 Payment Subject to Excise Tax. If it shall be determined that
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any payment or distribution made, or benefit provided, by SPI to or for the
benefit of Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this agreement or otherwise, but determined without
regard to any additional payments required under this paragraph 7) (a "Payment")
would be subject to the excise tax imposed by section 4999 of the Code (or any
similar excise tax) or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are referred to collectively as the "Excise Tax"), then Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by Executive of all taxes (including any Excise
Tax, income tax, or payroll tax) imposed upon the Gross-Up Payment and any
interest or penalties imposed with respect to such taxes, Executive retains from
the Gross-Up Payment an amount equal to the Excise Tax imposed upon the
Payments.
7.2 Determination of Gross-Up Payment. Subject to the provisions
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of paragraph 7.3, all determinations required to be made under this paragraph 7,
including the determination of whether a Gross-Up Payment is required and of the
amount of any such Gross-Up Payment, shall be made by tax counsel selected by
the independent public accounting
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firm then retained by SPI to audit its financial statements and acceptable to
SPI ("Tax Counsel"), which shall provide detailed supporting calculations to
both SPI and Executive within 15 business days of the date of termination, if
applicable, or such earlier time as is requested by SPI, provided that any
determination that an Excise Tax is payable by Executive shall be made on the
basis of substantial authority. SPI shall pay the initial Gross-Up Payment, if
any, as determined pursuant to this paragraph 7.2, to Executive within five
business days of the receipt of Tax Counsel's determination. If Tax Counsel
determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion that he has substantial authority not to report
any Excise Tax on his Federal income tax return. Any determination by Tax
Counsel meeting the requirements of this paragraph 7.2 shall be binding upon SPI
and Executive; subject only to payments pursuant to the following sentence based
on a determination that additional Gross-Up Payments should have been made,
consistent with the calculations required to be made under this paragraph 7 (the
amount of such additional payments, including any interest and penalties, are
referred as the "Gross-Up Underpayment"). If SPI exhausts its remedies pursuant
to paragraph 7.3, and Executive is required to make a payment of any Excise Tax,
Tax Counsel shall determine the amount of the Gross-Up Underpayment that has
occurred and SPI shall promptly pay any such Gross-Up Underpayment to or for the
benefit of Executive. SPI shall pay the fees and disbursements of Tax Counsel.
7.3 SPI Remedies with Respect to IRS Claim. Executive shall notify
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SPI in writing of any claim by the Internal Revenue Service that, if successful,
would require the payment by SPI of a Gross-Up Underpayment. Such notification
shall be given as soon as practicable but not later than ten business days after
Executive receives written notice of such claim and shall apprise SPI of the
nature of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim before the last day of the 30-day period
following the date on which he gives such notice to SPI (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If SPI notifies Executive in writing before the last day of such period that it
desires to contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, Executive shall:
(i) give SPI any information reasonably requested by SPI
relating to such claim,
(ii) take such action in connection with contesting such claim
as SPI shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by counsel
reasonably selected by SPI and reasonably satisfactory to Executive,
(iii) cooperate with SPI in good faith in order effectively to
contest such claim, and
(iv) permit SPI to participate in any proceedings relating to
such claim;
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provided, however, that SPI shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax, income tax, or payroll tax, including interest and
penalties, imposed as a result of such representation and payment of costs and
expenses. Without limitation of the foregoing provisions of this paragraph 7.3,
SPI shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings, and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction, and in one or more
appellate courts, as SPI shall determine; provided, however, that if SPI directs
Executive to pay such claim and sue for a refund, SPI shall advance the amount
of such payment to Executive, on an interest-free basis and shall indemnify and
hold Executive harmless, on an after-tax basis, from any Excise Tax, income tax,
or payroll tax, including interest or penalties, imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating to
the payment of taxes for the taxable year of Executive with respect to which
such contested amount is claimed to be due shall be limited solely to such
contested amount, unless Executive agrees otherwise. Furthermore, SPI's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority. If SPI has notified Executive that it desires to
contest such an IRS claim but fails to pursue the contest in good faith, or
fails to pay the costs and expenses of the contest, or, in the case SPI has
directed Executive to pay the tax claimed and sue for a refund, fails to advance
the amount of such payment to Executive, then SPI shall forfeit its right to
control the proceedings taken in connection with such contest and Executive may,
in his discretion, assume control of such proceedings, provided, however, that
Executive's assumption or failure to assume control of such proceedings shall
not negate SPI's obligation to make a Gross-Up Underpayment; to bear and pay all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest; and to indemnify Executive, on an after-tax basis,
for any Excise Tax, income tax, or payroll tax, including interest and
penalties, imposed as a result of such payment of costs and expenses.
7.4 Repayment of Advance from Refund. If, after the receipt by
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Executive of an amount advanced by SPI pursuant to paragraph 7.3, Executive
becomes entitled to receive any refund with respect to such claim, Executive
shall (subject to SPI's complying with the requirements of paragraph 7.3)
promptly pay to SPI the amount of such refund (together with any interest paid
or credited on the amount of the refund after taxes applicable to such
interest). If, after the receipt by Executive of an amount advanced by SPI
pursuant to paragraph 7.3 a determination is made that Executive shall not be
entitled to any refund with respect to such claim and SPI does not notify
Executive in writing within 30 days after such determination of its intent to
contest such denial of refund, then any obligation of Executive to repay such
advance shall be forgiven and the amount of such advance shall offset the amount
of Gross-Up Underpayment required to be paid.
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7.5 Deferred Gross-Up Payment. Notwithstanding the provisions of
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paragraph 7.2, if any Payment to which an Excise Tax relates shall not be
payable or distributable before the date the initial Gross-Up Payment is due
pursuant to paragraph 7.2, then the Gross-Up Payment attributable to such
Payment shall be paid to Executive within five business days of the date of such
Payment.
7.6 Reduction in Severance Benefit If Net After-Tax Benefit from
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Gross-Up Not More than $5,000. Notwithstanding any other provision of this
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paragraph 7, if the Net After-Tax Benefit (as defined below) Executive would
realize after receipt of the Gross-Up Payment would not exceed by more than
$5,000 the Net After-Tax Benefit Executive would realize if the Severance
Benefit were reduced to the extent required, in the opinion of Tax Counsel, to
prevent subjection of any part of the remaining Severance Benefit and other
payments and benefits to which Executive is entitled to the Excise Tax, then
Executive shall not be entitled to the Gross-Up Payment and his Severance
Benefit shall be so reduced. SPI shall determine which elements of the
Severance Benefit shall be reduced to conform to the provisions of this
paragraph, provided, however, that there shall be no reduction under this
paragraph in the amount payable to Executive under a deferred compensation
arrangement between SPI and Executive to the extent such amount is attributable
to deferrals elected by Executive or to Executive's vested interest, determined
as of the date of termination of employment without regard to any acceleration
resulting from a Change in Control, in nonelective deferrals credited to him.
Any determination made by Tax Counsel pursuant to this paragraph shall be
conclusive and binding on Executive; subject only to a determination under the
provisions of paragraph 7.7 that an Excise Tax is payable. "Net After-Tax
Benefit" shall mean the sum of the parachute payments (within the meaning of
section 280G of the Code) payable to Executive under this agreement and all
other plans, practices, policies, or programs of SPI, reduced by the federal,
state, and local income taxes payable with respect to the parachute payments and
by any Excise Tax imposed on Executive with respect to the parachute payments.
7.7 Restoration of Reduction and Gross-Up Payment If Excise Tax
-----------------------------------------------------------
Due. If after Executive's Severance Benefit has been reduced pursuant to
paragraph 7.6, Executive receives a claim by the Internal Revenue Service that,
if successful, would require payment of an Excise Tax, then Executive shall
notify SPI in writing as soon as practicable but not later than ten business
days after Executive receives written notice of the claim and shall apprise SPI
of the nature of the claim and the date on which the claim is requested to be
paid. The provisions of paragraphs 7.3 and 7.4 shall then apply (except that the
term "Excise Tax" shall be substituted for the term "Gross-Up Payment" in the
last sentence of paragraph 7.3). If SPI exhausts its remedies pursuant to
paragraph 7.3, and Executive is required to make a payment of any Excise Tax,
SPI shall promptly pay to Executive the amount by which his Severance Benefit
was reduced pursuant to paragraph 7.6; Executive shall be entitled to receive a
Gross-Up Payment pursuant to paragraph 7.1; Tax Counsel shall determine the
amount of the Gross-Up Payment pursuant to paragraph 7.2; and SPI shall pay the
fees and disbursements of Tax Counsel.
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7.8 Confidential Information. Unless he has obtained SPI's prior
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written consent, Executive shall not, during or following his employment with
SPI, directly or indirectly, disclose to any person, other than SPI, or any
affiliate of SPI, or its officers, directors, or employees entitled to such
information, or use for his own or another's benefit, any confidential or
proprietary information relating to the business affairs or operations of SPI
including, without limitation, SPI's marketing plans and acquisition strategies.
8. Covenant Against Competition. During Executive's employment by
----------------------------
SPI under this agreement, Executive shall not directly or indirectly, as a
principal, officer, director, shareholder (except as owner of less than two
percent of the shares of a corporation the stock of which is publicly traded),
partner, or employee or in any capacity whatsoever, engage in or become
associated with, or advise or assist, any enterprise that is engaged in any
business or provides any services that is or are competitive with any business
or services that is engaged in or are offered by or being developed by SPI
("Competitor"). It is agreed that Executive's services are unique and
irreplaceable and that the loss of Executive's services or the use of those
services by a competitor would cause irreparable harm to SPI. Any breach or
threatened breach by Executive of any provision of this paragraph 9 cannot be
remedied solely by damages. Accordingly, in the event of a breach or a
threatened breach by Executive of any of the provisions of this paragraph 9, SPI
shall be entitled to injunctive relief. For purposes of this paragraph 9,
payment of a Severance Benefit under paragraph 6.3 of this agreement does not
constitute employment.
9. Covenant Against Interference with Employees. Executive shall
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not, during his employment with SPI and the 24-month period following his
employment with SPI, interfere with SPI's relationship with any of its other
employees or with any employee of (i) a direct or indirect subsidiary of SPI,
(ii) any company controlled by, controlling, or under common control with SPI,
or (iii) any company that performs property management services for SPI (any
employee of SPI or described above shall be referred to as a "protected
employee") by recruiting a protected employee for employment with a Competitor
(as defined in paragraph 8, above) or by requesting the services of a protected
employee for a Competitor. This agreement shall not preclude Executive's
response on behalf of a Competitor to an application for employment by a
protected employee, provided Executive did not in any manner solicit the
application.
10. Successors; Binding Agreement.
-----------------------------
10.1 SPI 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 SPI to assume and agree to perform this agreement in
the same manner and to the same extent that SPI would be required to perform it
if no such succession had taken place. Failure of SPI to obtain such assumption
and agreement shall be a breach of this agreement and shall entitle Executive to
compensation from SPI in the same amount and on the same terms as he would be
entitled if he terminated his employment with SPI following a Change in Control
with Adverse Circumstances (as described in paragraph 6) of this agreement. As
used in this agreement, "SPI"
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shall mean SPI as defined above and any successor to its business or assets that
assumes and agrees to perform this agreement by operation of law or otherwise.
10.2 This agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees.
11. Notice. For the purpose of this agreement, notices shall be in
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writing and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
and addressed, in the case of SPI, to the address set forth on the first page of
this agreement and directed to the attention of the office of the Chairman, and,
in the case of Executive, to the most recent address for Executive in SPI's
payroll records, or addressed to such other address as either party may have
furnished to the other in writing in accordance with this paragraph, except that
notice of change of address shall be effective only upon receipt.
12. Miscellaneous. No provision of this agreement may be modified,
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waived, or discharged except by an instrument in writing executed by Executive
and an authorized officer of SPI. A waiver by either party of any breach of, or
compliance with, any condition or provision of this agreement shall not be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
any prior or subsequent time. No agreements or representations, oral or
otherwise, with respect to the subject matter of this agreement have been made
by either party that are not expressly set forth in this agreement. The
validity, interpretation, construction, and performance of this agreement shall
be governed by the internal laws of the State of Louisiana, without regard to
the principles of conflicts of law. All references to sections of the Exchange
Act and the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for under this agreement shall be subject
to any applicable tax withholding as required under federal, state, or local
law.
13. Validity. The invalidity or unenforceability of any provision
--------
of this agreement shall not affect the validity of any other provision of this
agreement, which shall remain in full force and effect.
14. Dispute Resolution.
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14.1 Mediation. Executive and SPI agree that if any claim, dispute,
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or controversy ("Dispute") arises with respect to the interpretation or
operation of this agreement or with respect to any aspect of the employment
relationship between Executive and SPI and if the Dispute cannot be resolved by
negotiation, they will attempt in good faith to resolve the Dispute by mediation
under the Commercial Mediation Rules of the American Arbitration Association
("AAA") before resorting to litigation or some other dispute resolution
procedure. If either party initiates mediation by filing with the AAA a
submission to mediation or a written request for mediation, the expense of the
initial AAA filing fee paid by the initiating party will be shared equally by
both parties.
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14.2 Litigation. No party shall commence litigation to resolve a
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dispute unless mediation has occurred. If litigation occurs, the parties agree
that the litigation will be initiated and conducted in courts of the State of
Louisiana within Orleans or Jefferson Parish or, if federal courts have
jurisdiction over the dispute, in the United States District Court for the
Eastern District of Louisiana.
15. Counterparts. This agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
SIZELER PROPERTY INVESTORS, INC.
By:__________________________________
_____________________________________
James W. Brodie
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