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EXHIBIT 10.63
EMPLOYMENT AGREEMENT
This employment agreement (this "Agreement") is entered into
this day of , 1998, by and between CORPORATE PROPERTY INVESTORS, INC., a
Delaware corporation and successor by merger to CORPORATE PROPERTY INVESTORS, a
Massachusetts business trust (such entities collectively, the "Company") and
HANS C. MAUTNER (the "Executive").
RECITALS
The Executive is currently the Chairman of the Board of
Directors (the "Board") and Chief Executive Officer of the Company. The Company
intends to merge with Simon DeBartolo Group, Inc., a Maryland corporation
("Simon"), pursuant to the terms of an Agreement and Plan of Merger dated as of
February 18, 1998 among the Company, Simon and Corporate Realty Consultants,
Inc., a Delaware corporation (the "Merger"). The Company desires to retain the
Executive as an officer of the Company following the Merger.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Employment, Term and Duties.
1.1 Employment. The Company hereby employs the
Executive and the Executive hereby accepts employment by the Company on the
terms and conditions set forth in this Agreement.
1.2 Term. The Executive's employment under this
Agreement shall commence on the effective date of the Merger (the "Effective
Date") and shall terminate on the last day of the month in which the fifth
anniversary of the Effective Date occurs (the "Termination Date"), unless
earlier terminated as provided in Section 4 below (the "Term").
1.3 Positions and Duties. During the Term, the
Executive shall serve as Vice Chairman of the Company and shall be a member of
the Executive Committee of the Company (the "Executive Committee"), which
committee shall be composed of members appointed by the Board whose employment
positions are at the level of Senior Executive Vice President or more senior in
the Company. The parties hereto agree that the Executive Committee shall consist
of the senior most officers of the Company and shall participate in
substantially all major initiatives and decisions made in respect of the
Company's day-to-day management and those matters delegated to it by the Board;
provided, however, that nothing herein shall prejudice the rights and duties of
the person serving as the Company's Chief Executive Officer ("CEO"), as
determined by the Board in accordance with
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the Company's by-laws. During the Term, the Executive shall report directly to
the Co-Chairmen of the Board or the CEO. The parties hereto agree that the
Executive, in his capacity as Vice Chairman, shall serve in the most senior
position in the Company following the Co-Chairmen of the Board and the CEO. In
connection therewith, the Executive's principal focus shall be to assist in the
operation of the Company at its most senior level in a manner determined from
time to time by the CEO or the Board of Directors. If elected by the Company's
shareholders, the Executive shall be and serve as a director of the Company.
Notwithstanding the foregoing, the Executive may engage in the following
activities (and shall be entitled to retain all economic benefits thereof
including fees paid in connection therewith) as long as they do not (without the
approval of the Company) substantially interfere with the performance of the
Executive's duties and responsibilities hereunder: (i) serve on corporate,
civic, religious, educational and/or charitable boards or committees, (ii)
deliver lectures, fulfill speaking engagements or teach on a part-time basis at
educational institutions and (iii) make investments in businesses or enterprises
and manage his personal investments in accordance with the Company's business
and ethics policy. The parties acknowledge that the Executive's participation
(and continuing participation) as a director of the commercial corporations
listed on Schedule I attached hereto have been approved by the Company.
Notwithstanding the above, the Executive shall not be required to perform any
duties and responsibilities which would be likely to result in a non-compliance
with or violation of any applicable law or regulation.
2. Compensation and Other Benefits.
2.1 Base Compensation. As compensation for services
rendered during the Term, the Company shall pay to the Executive a base salary
(the "Base Salary") initially equal to $762,000 subject to increase from time to
time by the Board. The Board shall review the Executive's annual Base Salary no
less frequently than annually to determine whether any such increase should be
made. The Base Salary shall be payable in accordance with the payroll policies
of the Company as from time to time in effect, less such amounts as shall be
required to be deducted or withheld therefrom by applicable law and regulations.
2.2 Annual Bonus. In addition to the Base Salary, the
Executive shall be eligible to receive, for each calendar year or portion
thereof occurring during the Term, a targeted annual bonus (the "Annual Bonus")
in an amount up to one hundred thirty-five percent (135%) of the Executive's
Base Salary for such calendar year or portion thereof. The amount of any such
Annual Bonus shall be determined by the Compensation Committee of the Board (the
"Committee") in accordance with the standard practice of such Committee relating
to the incentive compensation program of the Company. The Annual Bonus shall be
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paid to the Executive, less such amounts as shall be required to be deducted or
withheld therefrom by applicable law and regulations, at such time or times as
is in accordance with the then prevailing policy of the Company relating to
incentive compensation payments.
2.3 Stock Options. As of the Effective Date, the
Company shall grant Executive a stock option to acquire 237,500 shares of the
Company's Common Stock pursuant to the Company's 1998 Stock Incentive Plan
("Stock Incentive Plan"). Such option shall have an option price equal to the
fair market value of the Simon Common Stock on the Effective Date and shall vest
in equal installments on the anniversary of the date of grant in years
1999-2001. As of the first anniversary of the Effective Date, the Company shall
grant Executive a stock option to acquire 62,500 shares of Common Stock of Simon
Property Group, Inc. pursuant to the Stock Incentive Plan. Such option shall
have an option price equal to fair market value of the Common Stock of Simon
Property Group, Inc. on the date of grant and shall vest in equal installments
on the anniversary of such date in years 2000-2001. In the event of Executive's
termination of employment prior to the first anniversary of the Effective Date
for any reason other than for Cause or by the Executive without Good Reason,
such option shall be granted as of the date of termination of employment and
shall be fully vested as of the date of grant. The maximum number of such
options which qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), shall be granted as
"incentive stock options" and the remainder of such options shall be
non-qualified stock options. The terms, conditions and restrictions with regard
to said stock options shall be evidenced by an Incentive Stock Option Agreement
(as to the incentive stock options) and a Nonqualified Stock Option Agreement
(as to the non-qualified stock options), substantially in the forms attached
hereto as Exhibit C-1 and Exhibit C-2 respectively which shall be incorporated
herein by reference and their terms, conditions and restrictions shall be
considered a part of this Agreement.
2.4 Retirement and Savings Plans. During the
Term, the Executive shall be eligible to participate as of the Effective Date in
all incentive, pension, retirement, savings, 401(k) and other employee pension
benefit plans and programs maintained by the Company from time to time for the
benefit of senior executives and/or other employees.
2.5 Welfare Benefit Plans. During the Term, the
Executive, the Executive's spouse, if any, and their eligible dependents, if
any, shall be eligible to participate as of the Effective Date in and be covered
under all the welfare benefit plans or programs maintained by the Company from
time to time including, without limitation, all medical, hospitalization,
dental, disability, life, estate and financial planning, accidental death and
dismemberment and travel accident insurance
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plans and programs including, without limitation, the split-dollar insurance
arrangement between the Company and the Executive, in each case on terms no less
favorable than as in effect for senior executive employees of the Company
immediately prior to the Effective Date.
2.6 General Business Expenses. The Company shall
pay or reimburse the Executive for all expenses that are consistent with the
Company's policy and reasonably and necessarily incurred by the Executive during
the Term in the performance of the Executive's duties under this Agreement. Such
expenses shall include the cost of a car and driver and any and all
Company-related business expenses arising out of activities at clubs at which
the Executive is a member. Such payment shall be made upon presentation of such
documentation as the Company has, as of the date hereof, customarily required of
its senior executive employees prior to making such payments or reimbursements.
2.7 Vacation. During the Term, the Executive
shall be entitled to five weeks of vacation per year. The Executive shall not be
permitted to accumulate and carryover unused vacation time or pay from year to
year except to the extent permitted in accordance with the Company's vacation
policy for senior executives.
2.8 Fringe Benefits. In addition, during the
Term, the Executive shall be entitled to use any aircraft owned by the Company
for his personal use, provided such aircraft is not otherwise in use by the
Company; and such other fringe benefits and perquisites as in effect and as
provided from time to time to the senior executives of the Company. The
Executive shall reimburse the Company for his personal use of the Company
aircraft at a rate equal to the rate the Executive would pay for first class
airfare for travel to the same destination on a commercial airline.
2.9 Office and Support Staff. Unless the
Executive otherwise agrees in writing, during the Term the Executive shall be
entitled to executive secretarial and other administrative assistance of a type
and extent, and to an office or offices (with furnishings and other
appointments) of a type and size, at least equal to that provided to the
Executive immediately prior to the Effective Date.
2.10 Option Plan Participation. Notwithstanding
anything herein to the contrary, the Executive shall not be entitled to any new
grants of stock options or other awards (other than the grant provided in
Section 2.3 hereof) under the Company's Stock Incentive Plan until January 1,
2002 unless the Committee otherwise determines.
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3. Non-Competition.
3.1 Covenants Against Competition. The Executive
acknowledges that as of the execution of this Employment Agreement (i) the
Company is engaged in the business of shopping center and other retail project
acquisition, operation and development (the "Business"); (ii) the Company's
Business is conducted in various markets throughout the United States; (iii) his
employment with the Company will have given him access to confidential
information concerning the Company; and (iv) the agreements and covenants
contained in this Agreement are essential to protect the business and goodwill
of the Company. Accordingly, the Executive covenants and agrees as follows:
(a) Non-Compete. Without the prior written consent of
the Board of Directors of the Company, the Executive shall not during
the Restricted Period (as defined below) within any metropolitan area
in which the Company owns any commercial real estate, directly (except
in the Executive's capacity as an officer of the Company or any of its
affiliates): (i) engage or participate in the Business; (ii) enter the
employ of, or render any services (whether or not for a fee or other
compensation) to, any person engaged in the Business; or (iii) acquire
an equity interest in any such person in any capacity; provided, that
the foregoing restrictions shall not apply at any time if the
Executive's employment is terminated during the Term by the Executive
for Good Reason (as defined below) or by the Company without Cause (as
defined below); provided, further, that during the Restricted Period
the Executive may own, directly or indirectly, solely as a passive
investment, securities of any company traded on any national securities
exchange or on the National Association of Securities Dealers Automated
Quotation System. As used herein, the "Restricted Period" shall mean
the period commencing with the Effective Date and ending on the first
anniversary of the last day of the Term.
(b) Confidential Information; Personal Relationships.
The Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and has invested substantial sums and will continue to
invest substantial sums to develop, maintain and protect confidential
information. The Executive agrees that, during and after the Restricted
Period, without the prior written consent of the Board of Directors of
the Company, the Executive shall keep secret and retain in strictest
confidence, and shall not knowingly use for the benefit of himself or
others all confidential matters relating to the Company's Business
including, without limitation, operational methods, marketing or
development plans or strategies, business acquisition plans, joint
venture proposals or plans, and new personnel acquisition plans,
learned by the Executive
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heretofore or hereafter (such information shall be referred to herein
collectively as "Confidential Information"); provided, however, that
nothing in this Agreement shall prohibit the Executive from disclosing
or using any Confidential Information (A) in the performance of his
duties hereunder, (B) as required by applicable law, regulatory
authority, recognized subpoena power or any court of competent
jurisdiction, (C) in connection with the enforcement of his rights
under this Agreement or any other agreement with the Company, or (D) in
connection with the defense or settlement of any claim, suit or action
brought or threatened against the Executive by or in the right of the
Company. Notwithstanding any provision contained herein to the
contrary, the term "Confidential Information" shall not be deemed to
include any general knowledge, skills or experience acquired by the
Executive or any knowledge or information known or available to the
public in general (other than as a result of a breach of this provision
by the Executive). Moreover, the Executive shall be permitted to retain
copies of, or have access to, all such Confidential Information
relating to any disagreement, dispute or litigation (pending or
threatened) involving the Executive.
(c) Employee of the Company and its Affiliates.
During the Restricted Period, without the prior written consent of the
Board of Directors of the Company, the Executive shall not, directly or
indirectly, hire or solicit, or cause others to hire or solicit, for
employment by any person other than the Company or any affiliate or
successor thereof, any employee of, or person employed within the two
years preceding the Executive's hiring or solicitation of such person
by, the Company and its affiliates or successors or encourage any such
employee to leave his employment. For this purpose, any person whose
employment has been terminated involuntarily by the Company (or any
predecessor of the Company) shall be excluded from those persons
protected by this Section 3.1(c) for the benefit of the Company.
(d) Business Relationship. During the Restricted
Period, the Executive shall not, directly or indirectly, request or
advise a person that has a business relationship with the Company to
curtail or cancel such person's business relationship with the Company.
3.2 Rights and Remedies Upon Breach. If the
Executive breaches, or threatens to commit a breach of, any of the provisions
contained in Section 3.1 of this Agreement (the "Restrictive Covenants"), the
Company shall have the following rights and remedies, each of which rights and
remedies shall be independent of the others and severally enforceable, and each
of
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which is in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
(a) Specific Performance. The right and remedy to
have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened
breach of the Restrictive Covenants would cause irreparable injury to
the Company and that money damages would not provide an adequate remedy
to the Company.
(b) Accounting. The right and remedy to require the
Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or
received by the Executive as the result of any action constituting a
breach of Restrictive Covenants.
3.3 Severability of Covenants. The Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in duration and geographical scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect without regard to the invalid
portions.
4. Termination.
4.1 Termination Due to Death or Disability. The
Company may terminate the Executive's employment hereunder due to Disability (as
defined below). In the event of the Executive's death or a termination of the
Executive's employment by the Company due to Disability, the Executive, his
estate or his legal representative, as the case may be, shall be entitled to:
(a) (i) in the case of death, a death benefit in an amount
equal to twenty-four months of monthly Base Salary at the rate in
effect (as provided for by Section 2.1 of this Agreement but not beyond
age 65) on the date of termination plus any amounts paid pursuant to
the group and/or individual life insurance policies referred to in
Section 2.5 of this Agreement, and (ii) in the case of Disability, an
amount equal to twenty-four months of monthly Base Salary at the rate
in effect plus any payments received under any long-term disability
plan or policy maintained by the Company) for so long as the Executive
is subject to a Disability, but not beyond age 65;
(b) any Base Salary accrued or any Annual Bonus for any
calendar year prior to the calendar year in which death or Disability
occurs that was earned but not yet paid as of the Date of Termination
(as defined herein);
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(c) a pro rata Annual Bonus for the calendar year in which
death or Disability occurs (determined and payable in accordance with
Section 2.2 of this Agreement);
(d) any accrued vacation pay;
(e) reimbursement for expenses incurred but not yet paid prior
to such death or Disability;
(f) all outstanding options granted to Executive to purchase
Common Stock under the Company's option plans (or under any option plan
of any predecessor to the Company) shall, to the extent not already
vested, become immediately fully vested and shall remain exercisable
until the end of the original term of such option without regard to the
Executive's termination of employment;
(g) in the case of death, any other compensation and benefits,
including deferred compensation, as may be provided in accordance with
the terms and provision of any applicable plans and programs of the
Company; and
(h) in the case of Disability, (i) continuation of the
Executive's health and welfare benefits (as described in Section 2.5 of
this Agreement) at the level in effect (as provided for by Section 2.5)
on the date of termination through the end of the three-year period
following the termination of the Executive's employment (or, to the
extent that any welfare benefit plan, program or arrangement in which
the Executive participates provides for a longer continuation period,
such longer period in accordance with such plan, program or
arrangement) due to Disability (or the Company shall provide the
economic equivalent thereof), and (ii) any other compensation and
benefits as may be provided in accordance with the terms and provisions
of any applicable plans and programs of the Company.
For purposes of this Section 4.1 and Section 2.3, "Disability"
means the Executive's inability to render, for a period of six consecutive
months, services hereunder by reason of permanent disability, as determined by
the written medical opinion of an independent medical physician mutually
acceptable to the Executive and the Company. If the Executive and the Company
cannot agree as to such an independent medical physician, each shall appoint one
medical physician and those two physicians shall appoint a third physician who
shall make such determination. Notwithstanding the foregoing, if the Executive,
in his sole discretion, shall so elect, the Executive shall be considered
disabled for the purposes of this Agreement if the Executive is deemed disabled
pursuant to the Company's long-term disability plan.
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4.2 Termination by the Company for Cause. The Company may
terminate the Executive's employment hereunder for Cause (as defined below) as
provided in this Section 4.2. If the Company terminates the Executive's
employment hereunder for Cause, the Executive shall be entitled to:
(a) Base Salary at the rate in effect (as provided for by
Section 2.1 of this Agreement) at the time of such termination through
the Date of Termination;
(b) any Annual Bonus earned but not yet paid as of the Date of
Termination;
(c) any accrued vacation pay;
(d) reimbursement for expenses incurred, but not yet paid
prior to such termination of employment; and
(e) any other compensation and benefits, including deferred
compensation, as may be provided in accordance with the terms and
provisions of any applicable plans and programs of the Company.
In any case described in this Section 4.2, the Executive shall
be given written notice authorized by a vote of at least a majority of the
members of the Board of Directors that the Company intends to terminate the
Executive's employment for Cause. Such written notice shall specify the
particular act or acts, or failure to act, which is or are the basis for the
decision to so terminate the Executive's employment for Cause. The Executive
shall be given the opportunity within 30 calendar days of the receipt of such
notice to meet with the Board of Directors to defend such act or acts, or
failure to act, and the Executive shall be given 15 business days after such
meeting to correct such act or failure to act. Upon failure of the Executive,
within such latter 15 day period, to correct such act or failure to act, the
Executive's employment by the Company shall automatically be terminated under
this Section 4.2 for Cause. Anything herein to the contrary notwithstanding, if,
following a termination of the Executive's employment by the Company for Cause
based upon the conviction of the Executive for a felony involving actual
dishonesty as against the Company, such conviction is overturned on appeal, the
Executive shall be entitled to the payments and the economic equivalent of the
benefits that the Executive would have received as a result of a termination of
the Executive's employment by the Company without Cause.
For purposes of this Section 4.2 and Section 2.3, "Cause"
means (a) the Executive is convicted of a felony involving actual dishonesty as
against the Company, or (b) the Executive, in carrying out his duties and
responsibilities under this Agreement, voluntarily engages in conduct which is
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demonstrably and materially injurious to the Company, monetarily or otherwise,
unless such act, or failure to act, was believed by the Executive in good faith
to be in the best interests of the Company.
4.3 Termination Without Cause or Termination For Good Reason.
The Company may terminate the Executive's employment hereunder without Cause and
the Executive may terminate his employment hereunder for Good Reason. If the
Company terminates the Executive's employment hereunder without Cause, other
than due to death or Disability, or if the Executive terminates his employment
for Good Reason, the Executive shall be entitled to:
(a) the amount equal to the product of (1) three times (2) the
sum of (x) the Executive's then Base Salary and (y) the Executive's
then Annual Bonus (but not less than the highest annual bonus paid to
the Executive with respect to the three years preceding the date of the
Executive's termination of employment); and
(b) the Company will contribute within 30 calendar days after
the Termination Date an amount to the Amended and Restated Supplemental
Executive Retirement Plan of Corporate Property Investors equal to 33%
of the amount set forth in clause (2) of Section 4.3(a) above.
(c) for three years after the Executive's Date of Termination,
or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the persons who from time to
time thereafter are Dependents (as defined herein) at least equal to
those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 2 if the
Executive's employment had not been terminated or, if more favorable to
the Executive and the Dependents, as in effect for senior executive
employees and their Dependents generally at any time thereafter.
"Dependents", as of any date, means the members of the Executive's
family who under the eligibility rules (as in effect on a date that is
six months prior to the Effective Date) of the plans or programs of the
Company (or any successor) which provide medical benefits, would, by
virtue of such status as family members, be eligible for benefits under
such plans or programs on such date.
(d) the Executive and the persons who from time to time
thereafter are Dependents shall continue to be eligible to participate
in and shall receive all benefits under any plan or program of the
Company providing medical benefits as are in effect on the date six
months prior to the Effective Date or under any plan or program of a
successor to the Company which provides medical benefits that are not
less favorable
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to the Executive and the Dependents than such plans or programs of the
Company until the date the Executive and the Dependents are all
eligible for Medicare benefits (by reason of attaining the minimum age
for such benefits without regard to whether an application has been
made therefor); provided, however, that (A) in no event will a
Dependent be eligible for benefits as described in this clause (d)
after the date he ceases to be a Dependent and (B)at all times after
the expiration of the three-year period described in clause (c) above,
the Executive shall pay for such coverage at the same rate as is
charged to other similarly situated individuals electing continuation
coverage under Section 4980B of the Code;
(e) all outstanding options granted to Executive to purchase
Common Stock under the Company's option plans (or under any option plan
of any predecessor to the Company) shall, to the extent not already
vested, become immediately fully vested and shall remain exercisable
until the end of the original term of such option without regard to
Executive's termination of employment;
(f) the Company will continue to pay any premiums due on
split-dollar life insurance policies (if any) in effect on the life of
the Executive for three years following the date of termination after
which time the Company shall distribute such policy to the Executive
without requiring the Executive to repay any premium paid by the
Company;
(g) notwithstanding any provisions to the contrary under any
outstanding recourse note issued under the Company's Employee Share
Purchase Plan or any other agreement providing for the acceleration or
prepayment of any such note payments under such note shall not be
accelerated as a result of Executive's termination of employment but
shall be due and payable in accordance with the terms of such note
determined as if Executive's employment had not terminated;
(h) the Company will transfer any car made available to the
Executive for his use by the Company to the Executive for no
consideration provided that the Executive pays any and all transfer
taxes and agrees to be solely responsible for insurance and the cost of
insurance after the date of transfer; and
(i) the Executive shall be entitled to keep any computer
and/or software provided to the Executive by the Company for home or
travel use for no consideration; and
(j) any Base Salary accrued or Annual Bonus earned but not yet
paid as of the Date of Termination;
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(k) any accrued vacation pay;
(l) reimbursement for expenses incurred, but not paid prior to
such termination of employment;
(m) any other compensation and benefits, including deferred
compensation, as may be provided in accordance with the terms and
provisions of any applicable plans or programs of the Company
(including, but not limited to, those plans described in Section 2).
For purposes of this Section 4.3 and Section 2.3, "Good
Reason" means and shall be deemed to exist if, without the prior express written
consent of the Executive, (a) the Executive is assigned any duties or
responsibilities inconsistent in any material respect with the scope of the
duties or responsibilities associated with the Executive's titles or positions,
as set forth and described in Section 1.3 of this Agreement; (b) the Executive
suffers a reduction in the duties, responsibilities or effective authority
associated with his titles and positions, as set forth and described in Section
1.3 of this Agreement (including, without limitation, if the Executive Committee
ceases to have the powers or reporting responsibilities described in Section 1.3
of this Agreement or if the Executive Committee is expanded beyond eight
members); (c) the Executive is not appointed to, or is removed from, the offices
or positions provided for in Section 1.3 of this Agreement; (d) the Executive's
compensation is decreased by the Company, or the Executive's benefits under
employee benefit or health or welfare plans or programs of the Company are in
the aggregate materially decreased; (e) the Company fails to obtain the full
assumption of this Agreement by a successor entity in accordance with Section
6.4 of this Agreement; (f) the Company fails to use its reasonable best efforts
to maintain, or cause to be maintained, adequate directors and officers
liability insurance coverage for the Executive; (g) without the Executive's
express written consent, the Company's requiring the Executive's work location
to be other than in the County of New York, New York, or, if mutually agreed in
connection with the expansion of the Company's overseas operations, London,
England; or (h) the Company purports to terminate the Executive's employment for
Cause and such purported termination of employment is not effected in accordance
with the requirements of this Agreement.
4.4 Voluntary Termination. The Executive may
effect a Voluntary Termination of his employment hereunder. A "Voluntary
Termination" shall mean a termination of employment by the Executive on his own
initiative other than (a) a termination due to death or Disability, or (b) a
termination for Good Reason. A Voluntary Termination shall not be, nor shall it
be deemed to be, a breach of this Agreement and shall entitle the Executive to
all of the rights and benefits which the Executive would be
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entitled in the event of a termination of his employment by the Company for
Cause.
4.5 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 plan or program provided
or maintained by the Company and for which the Executive may qualify, nor shall
anything herein limit or otherwise prejudice such rights as the Executive may
have under any other existing or future agreements with the Company. Except as
otherwise expressly provided for in this Agreement, amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plans
or programs of the Company at or subsequent to the date of termination shall be
payable in accordance with such plans or programs. If the Company is unable, for
any reason, to provide the Executive with the stock option grant described in
Section 2.3 to which he is then entitled (either with respect to the option
grant or the delivery of Company shares upon exercise of such options), it will
take all necessary action to provide the Executive with the economic value
thereof (including, if appropriate, through a cashless exercise program in
respect of such stock options).
4.6 Stock Grant and Stock Options. In the event of
any termination described in Sections 4.1, 4.2, 4.3 and 4.4 above, Executive's
rights with regard to his stock grant, loan agreement and stock options shall be
as set forth in the respective agreement containing the terms and conditions
pertaining thereto.
4.7 Certain Additional Payments by the Company.
Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or that any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Subject to the
provisions of this Section 4.7, all determinations required to be made
hereunder, including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall be made by Arthur Andersen LLP or by another
nationally recognized certified public accounting firm that is mutually selected
by the Executive and the Company (the "Accounting Firm") at the sole expense of
the Company, which
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shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the date of termination of the Executive's
employment under this Agreement, if applicable, or such earlier time as is
requested by the Company or the Executive. If the Accounting Firm determines
that no Excise Tax is payable by the Executive, the Accounting Firm shall
furnish the Executive with an opinion that he has substantial authority not to
report any Excise Tax on his federal income tax return. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments, which will not have been made by the Company should have been
made (an "Underpayment"), consistent with the calculations required to be made
hereunder. If the Company exhausts its remedies pursuant hereto and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing
from time to time, including (without limitation) accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith to
contest effectively such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
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provided that the Company 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 the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and payment of costs
and expenses. Without limitation on the foregoing provisions hereof the Company
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 the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the 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 the Company shall determine, provided that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax, including interest or penalties with respect
thereto, 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 payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the 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, after the receipt by the Executive of an
amount advanced by the Company pursuant hereto, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant hereto, a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
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4.8 Payment. Except as otherwise provided in this
Agreement, any payments to which the Executive shall be entitled under this
Section 4, including, without limitation, any economic equivalent of any
benefit, shall be made as promptly as possible following the date of
termination. If the amount of any payment due to the Executive cannot be finally
determined within 90 days after the Date of Termination, such amount shall be
estimated on a good faith basis by the Company and the estimated amount shall be
paid no later than 90 days after such Date of Termination. As soon as
practicable thereafter, the final determination of the amount due shall be made
and any adjustment requiring a payment to or from the Executive shall be made as
promptly as practicable.
4.9 Date of Termination. For purposes of this
Agreement, "Date of Termination" shall mean the date on which Executive's
employment with the Company shall terminate for any reason.
5. Indemnification.
Contemporaneously herewith, the Company and the
Executive shall execute an indemnification agreement which, by its terms, shall
indemnify the Executive to the fullest extent permitted by applicable law and by
the Company's certification of incorporation and by-laws. Such indemnification
agreement shall contain terms no less favorable to the Executive than the terms
of any other indemnification agreement provided to any other senior officer of
the Company (including senior officers of Simon).
6. Other Provisions.
6.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission or sent by
certified, registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally, telegraphed, telexed or sent by
facsimile transmission or, if mailed, on the date of actual receipt thereof, as
follows:
(i) If to the Company to:
National City Center
115 West Washington Street
Indianapolis, IN 46204
Attn: General Counsel
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With a copy to:
Frank A. Daniele, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
If to the Executive, to:
Mr. Hans C. Mautner
1088 Park Avenue
New York, NY 10028
Any party may change its address for notice
hereunder by notice to the other party hereto.
6.2 Entire Agreement. This Agreement, including the
attached Schedules which are a part hereof for all purposes, contains the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes all prior agreements, written or oral, with respect
thereto.
6.3 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of New York.
6.4 Assignment. The obligations of the Executive
hereunder are personal and may not be assigned or delegated by him or
transferred in any manner whatsoever, nor are such obligations subject to
involuntary alienation, assignment or transfer. The Company shall have the right
to assign this Agreement and to delegate all rights, duties and obligations
hereunder, either in whole or in part, to any parent, affiliate, successor or
subsidiary organization or company of the Company, so long as the obligations of
the Company under this Agreement remain the obligations of the Company,
provided, that the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably acceptable to the Executive, 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 had taken
place.
7. Resolution of Disputes.
7.1 Negotiation. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiations between the Executive and an executive officer of the
Company who has authority to settle the controversy. Any party may give the
other party written notice of any dispute not resolved in the normal course of
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business. Within 10 days after the effective date of such notice, the Executive
and an executive officer of the Company shall meet at a mutually acceptable time
and place within the New York City metropolitan area, and thereafter as often as
they reasonably deem necessary, to exchange relevant information and to attempt
to resolve the dispute. If the matter has not been resolved within 30 days of
the disputing party's notice, or if the parties fail to meet within 10 days,
either party may initiate arbitration of the controversy or claim as provided
hereinafter. If a negotiator intends to be accompanied at a meeting by an
attorney, the other negotiator shall be given at least three business days'
notice of such intention and may also be accompanied by an attorney. All
negotiations pursuant to this Section 7.1 shall be treated as compromise and
settlement negotiations for the purposes of the federal and state rules of
evidence and procedure.
7.2 Arbitration. Any dispute arising out of or
relating to this Agreement or the breach, termination or validity thereof, which
has not been resolved by nonbinding means as provided in Section 7.1 within 60
days of the initiation of such procedure, shall be finally settled by
arbitration conducted expeditiously in New York City, New York in accordance
with the Center for Public Resources, Inc. ("CPR") Rules for Non- Administered
Arbitration of Business Disputes by three independent and impartial arbitrators,
of whom each party shall appoint one, provided that if one party has requested
the other to participate in a non-binding procedure and the other has failed to
participate, the requesting party may initiate arbitration before the expiration
of such period. Any such party shall be appointed from the CPR Panels of
Neutrals. The arbitration shall be governed by the United States Arbitration Act
and any judgment upon the award decided upon the arbitrators may be entered by
any court having jurisdiction thereof. The arbitrators are not empowered to
award damages in excess of compensatory damages and each party hereby
irrevocably waives any damages in excess of compensatory damages. Each party
hereby acknowledges that compensatory damages include (without limitation) any
benefit or right of indemnification given by another party to the other under
this Agreement.
7.3 Expenses. The Company shall promptly pay or
reimburse the Executive for all costs and expenses, including, without
limitation, court or arbitration costs and attorneys' and accountants' fees and
disbursements incurred by the Executive as a result of any claim, action or
proceeding (including, without limitation, a claim, action or proceeding by the
Executive against the Company) arising out of, or challenging the validity or
enforceability of, this Agreement or any provision hereof or any other agreement
or entitlement referred to herein.
8. Successors. This Agreement shall be binding upon and inure
to the benefit of the Executive and his heirs,
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executors, administrators and legal representatives. This Agreement shall be
binding upon and inure to the benefit of the Company and its successors and
assigns.
9. No Mitigation or Set-Off. The provisions of this Agreement
are not intended to, nor shall they be construed to, require that the Executive
mitigate the amount of any payment provided for in this Agreement by seeking or
accepting other employment, nor shall the amount of any payment provided for in
this Agreement be reduced by any compensation earned by the Executive as a
result of his employment by another employer or otherwise. The Company's
obligations to make the payments to the Executive required under this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set off, counterclaim, recoupment, defense or other claim, right or action that
the Company may have against the Executive.
10. Amendment. This Agreement may be amended or modified only
by an agreement in writing executed by all of the parties hereto.
11. Beneficiaries/References. The Executive shall be entitled
to select (and change) a beneficiary or beneficiaries to receive any
compensation or benefit payable hereunder following the Executive's death, and
may change such election, in either case by giving the Company written notice
thereof. In the event of the Executive's death or a judicial determination of
his incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his beneficiary(ies), estate or other legal
representative(s), as the case may be.
12. Representation. The Company represents and warrants that
it is fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement between the Company and any other person, firm or organization or any
applicable laws or regulations.
13. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement or the
Executive's employment hereunder to the extent necessary to the intended
preservation of such rights and obligations.
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14. As of the Effective Date, this Agreement shall
supersede all prior employment and severance agreements between the Company (or
its predecessors) and the Executive, including the Executive Agreement dated as
of August 7, 1997.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective for all purposes as of the date first above written.
CORPORATE PROPERTY INVESTORS, INC.
By:_____________________________________
Name:__________________________
Title:_________________________
_________________________________________
HANS C. MAUTNER
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