AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
by and between
ALEXANDRIA REAL ESTATE EQUITIES, INC.,
a Maryland corporation,
and
GARY A. KREITZER,
an individual
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this
"Agreement") originally made and entered into as of the fifth (5th) day of
January, 1994, (the "Original Effective Date"), by and between Health Science
Properties Holding Corp., a Maryland corporation (the "Parent") and Gary A.
Kreitzer, an individual (the "Officer") is hereby amended and restated in its
entirety effective as of March 28, 1997 (the "Effective Date") to read as
follows:
RECITAL
WHEREAS, on November 3, 1994, Parent transferred to its then
wholly-owned subsidiary Alexandria Real Estate Equities, Inc., a Maryland
corporation (formerly, Health Science Properties, Inc.) (the "Corporation")
substantially all of its property, assets and certain liabilities, including
Parent's rights and obligations under this Agreement;
WHEREAS, on July 30, 1996, this Agreement was amended pursuant to
an agreement between the Corporation and Officer;
WHEREAS, Corporation desires to continue to employ Officer as its
Senior Vice President and In-House Counsel, and Officer is willing to
continue to accept such employment by Corporation, on the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to
amend and restate this Agreement as follows:
1. POSITION AND DUTIES; LOCATION.
During the Term (as defined in Paragraph 2 below) of this Agreement,
Officer agrees to be employed by and to serve Corporation as its Senior Vice
President and In-House Counsel or in such other capacity consistent with the
Officer's current position as a senior executive officer, as may be determined
by the Board of Directors of the Corporation (the "Board"). Corporation agrees
to employ and retain Officer in such capacities. Officer shall devote such of
his business time, energy, and skill to the affairs of Corporation as shall be
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necessary to perform the duties of such positions. Officer shall report to the
President or such other officer as the Board shall direct, and at all times
during the Term (as defined in Paragraph 2 below) of this Agreement shall have
powers and duties at least commensurate with his position as a senior executive
officer. Officer shall be based at the offices of Corporation in the San Diego,
California metropolitan area, except for required travel on Corporation's
business.
2. TERM OF EMPLOYMENT.
The term (the "Term") of this Agreement shall be for a period
commencing January 1, 1997 and ending on December 31, 1998 (the "Termination
Date"), unless terminated earlier pursuant to this Agreement (the "Early
Termination Date"). Commencing on December 31, 1998 and on each subsequent
anniversary thereof, the Term shall be automatically extended for one (1)
additional year unless, no later than six (6) months before such date, either
party shall have given written notice to the other that it does not wish to
extend the Term of this Agreement. References herein to the Term of this
Agreement shall refer to both the initial Term and any such extended Term.
3. COMPENSATION, BENEFITS AND REIMBURSEMENT.
3.1 BASE SALARY. During the Term of this Agreement, Officer shall
be entitled to the following base salary:
(a) MINIMUM BASE. During the Term of this Agreement and subject
to the terms and conditions set forth herein, Corporation agrees to pay to
Officer an annual "Base Salary" of One Hundred Forty Thousand Dollars
($140,000) or such higher amount as may from time to time be determined by
Corporation. Unless otherwise agreed to in writing by Officer and
Corporation, and subject to Subparagraph (b) below, the salary shall be
payable in substantially equal semimonthly installments in accordance with
the standard policies of Corporation in existence from time to time.
(b) EARNED BASE SALARY. For purposes of any early termination of
this Agreement as provided in Paragraph 4 below, the term "Earned Base
Salary" shall mean all semimonthly installments of the Base Salary which have
become due and payable to Officer together with any partial monthly
installment prorated on a daily basis up to and including the applicable
Termination Date.
3.2 INCREASES IN BASE SALARY. Officer's Base Salary shall be
reviewed no less frequently than on each anniversary of the Original
Effective Date during the Term by the
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Board (or such committee as may be appointed by the Board for such purpose).
The Base Salary payable to Officer shall be increased on each such
anniversary date (and such other times as the Board or a committee of the
Board may deem appropriate during the Term of this Agreement) by an amount
determined by the Board (or a committee of the Board). Each such new Base
Salary shall become the base for each successive year increase; PROVIDED,
HOWEVER, that, at a minimum, such increase shall be equal to the cumulative
cost-of-living increment as reported in the "Consumer Price Index, Los
Angeles, California, All Items," published by the U.S. Department of Labor
(using January 1, 1994, as the base date for comparison). Any increase in
Base Salary or other compensation shall in no way limit or reduce any other
obligations of Corporation hereunder and, once established at an increased
specified rate, Officer's Base Salary shall not be reduced unless Officer
otherwise agrees in writing.
3.3 BONUS. Officer shall be eligible to receive a bonus for each
fiscal year of Corporation (or portion thereof) during the Term of this
Agreement, with the actual amount of any such bonus to be determined in the
sole discretion of the Board (or a committee of the Board) based upon its
evaluation of Officer's performance during such year and such other factors
and conditions as the Board (or a committee of the Board) deems relevant.
Any such bonus shall be payable within seventy-five (75) days after the end
of Corporation's fiscal year to which such bonus relates. The Board shall,
at an appropriate subsequent time, consider for the benefit of Officer and
other specified executive officers of the Corporation the establishment of an
annual incentive compensation plan providing for the payment of a minimum
annual bonus based upon the achievement of certain objective criteria.
3.4 ADDITIONAL BENEFITS. During the Term of this Agreement,
Officer shall be entitled to the following additional benefits:
(a) OFFICER BENEFITS. Officer shall be eligible to participate
in such of Corporation's benefit and deferred compensation plans as are made
available to executive officers of Corporation, including, without
limitation, Corporation's stock incentive plans, annual incentive
compensation plans, profit sharing/pension plans, deferred compensation
plans, annual physical examinations, dental, vision, sick pay, and medical
plans, personal catastrophe and accidental death insurance plans, financial
planning and automobile arrangements, retirement plans and supplementary
executive retirement plans, if any. For purposes of establishing the length
of service under any benefit plans or programs of Corporation, Officer's
employment with the Corporation will be deemed to have commenced on the
Original Effective Date of this Agreement. Until Corporation adopts a package
of health and medical benefits, Corporation shall promptly reimburse Officer
for payments made by Officer (i) with respect to the continuation of benefits
provided by Officer's previous employer pursuant to Section 4980B ("COBRA")
of the Internal Revenue Code of 1986, as amended (the
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"Code"), (ii) upon expiration of COBRA coverage to maintain substantially
similar health and medical benefits coverage for Officer and his family, and
(iii) if Officer is not covered by COBRA, to maintain reasonable health and
medical benefits coverage for Officer and his family.
(b) VACATION. During the Term of this Agreement, Officer shall be
entitled to four (4) weeks of vacation during each year during the Term of
this Agreement and any extensions thereof, prorated for partial years. Any
accrued vacation not taken during any year may be carried forward to
subsequent years; PROVIDED that Officer may not accrue more than eight (8)
weeks of unused vacation at any time.
(c) LIFE INSURANCE. During the Term of this Agreement,
Corporation shall, at its sole cost and expense, procure and keep in effect
term life insurance (a minimum three (3) year term certain policy) on the
life of Officer, payable to such beneficiaries as Officer may from time to
time designate, in the aggregate amount of One Million Dollars ($1,000,000).
Such policy shall be owned by Officer or by a member of his immediate family.
Corporation shall have no incidents of ownership therein.
(d) DISABILITY INSURANCE. During the Term of this Agreement,
Corporation shall, at its sole cost and expense, procure and keep in effect
disability insurance similar to Officer's current disability insurance policy
on Officer, payable to Officer in an annual amount not less than sixty
percent (60%) of Officer's then-existing Base Salary (the "Disability
Policy"). For purposes of this Agreement, "Permanent Disability" shall have
the same meaning as is ascribed to such terms in the Disability Policy
(including the COBRA Disability Policy) covering Officer at the time of
occurrence of such Permanent Disability.
(e) REIMBURSEMENT FOR EXPENSES. During the Term of this
Agreement, Corporation shall reimburse Officer for all reasonable
out-of-pocket business and/or entertainment expenses incurred by Officer for
the purpose of and in connection with the performance of his services
pursuant to this Agreement. Officer shall be entitled to such reimbursement
upon the presentation by Officer to Corporation of vouchers or other
statements itemizing such expenses in reasonable detail consistent with
Corporation's policies. In addition, Officer shall be entitled to
reimbursement for (i) dues and membership fees in professional organizations
and/or industry associations in which Officer is currently a member or
becomes a member, and (ii) appropriate industry seminars and mandatory
continuing education.
(f) WITHHOLDING. Compensation and benefits paid to Officer under
this Agreement shall be subject to applicable federal, state and local wage
deductions and other deductions required by law.
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4. TERMINATION OF THE AGREEMENT.
4.1 TERMINATION BY CORPORATION DEFINED.
(a) TERMINATION WITHOUT CAUSE. Subject to the provisions set
forth in Paragraph 4.3 below, "Termination Without Cause" shall constitute
any termination by Corporation other than termination for Cause (as defined
in Paragraph 4.1(b) below).
(b) TERMINATION FOR CAUSE. Subject to the provisions set forth in
Paragraph 4.3 below, prior to the Termination Date, Corporation shall have
the right to terminate this Agreement for Cause immediately after written
notice has been delivered to Officer, which notice shall specify the reason
for and the effective date of such Termination (which date shall be the
applicable Early Termination Date). For purposes of this Agreement, "Cause"
shall mean the following:
(i) Officer's use of alcohol or narcotics which proximately
results in the willful material breach or habitual willful neglect of
Officer's duties under this Agreement;
(ii) Officer's criminal conviction of fraud, embezzlement,
misappropriation of assets, malicious mischief, or any felony;
(iii) Officer's willful Material Breach (as defined below) of
this Agreement, if such willful Material Breach is not cured by Officer
within thirty (30) days after Corporation's written notice thereof
specifying the nature of such willful Material Breach. For purposes of
this Paragraph 4.1(b), the term willful "Material Breach" shall mean the
substantial and continual willful nonperformance of Officer's duties
under this Agreement which the Board determines has resulted in material
injury to Corporation.
(c) TERMINATION BY REASON OF DEATH OR DISABILITY. Subject to the
provisions set forth in Paragraph 4.3 below, prior to the Termination Date,
Corporation shall have the right to terminate this Agreement by reason of
Officer's death or Permanent Disability.
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4.2 TERMINATION BY OFFICER DEFINED.
(a) TERMINATION OTHER THAN FOR GOOD REASON. Subject to the
provisions set forth in Paragraph 4.3 below, Officer shall have the right to
terminate this Agreement for any reason other than for Good Reason (as
defined in Paragraph 4.2(b) below), at any time prior to the Termination
Date, upon written notice delivered to Corporation thirty (30) days prior to
the effective date of termination specified in such notice (which date shall
be the applicable Early Termination Date).
(b) TERMINATION FOR GOOD REASON. Subject to the provisions of
Paragraph 4.3 below, Officer shall have the right to terminate this Agreement
prior to the Termination Date in the event of the material breach of this
Agreement by Corporation, if such breach is not cured by Corporation within
thirty (30) days after written notice thereof specifying the nature of such
breach has been delivered to Corporation, or, following a Change in Control
(as defined in Paragraph 4.4(e) below), under the circumstances set forth in
Paragraph 4.2(c) below. For purposes of this Agreement, termination of this
Agreement by Officer in the event of Corporation's material breach of this
Agreement in accordance with the provisions of this Paragraph 4.2(b) shall be
defined as termination by Officer for "Good Reason."
(c) GOOD REASON FOLLOWING A CHANGE IN CONTROL. Following a Change
in Control (as defined in Paragraph 4.4(e) below), "Good Reason" shall mean,
without Officer's express written consent, a material breach of this
Agreement by Corporation, including the occurrence of any of the following
circumstances, which breach is not fully corrected within thirty (30) days
after written notice thereof specifying the nature of such breach has been
delivered to Corporation:
(a) the assignment to Officer of any duties inconsistent with
the position in Corporation that Officer held immediately prior to the Change in
Control, or an adverse alteration in the nature or status of Officer's
responsibilities from those in effect immediately prior to such change;
(b) a reduction by Corporation in Officer's annual base salary
as in effect on the date hereof or as the same may be increased from time to
time;
(c) the relocation of Officer's offices to a location outside
the San Diego metropolitan area (or, if different, the metropolitan area in
which such offices are located immediately prior to the Change in Control) or
Corporation's requiring Officer to travel on Corporation's business to an extent
not substantially consistent with Officer's business travel obligations
immediately prior to the Change in Control;
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(d) the failure by Corporation to pay Officer any portion of
his current compensation except pursuant to an across-the-board compensation
deferral similarly affecting all officers of Corporation and all officers of
any person whose actions resulted in a Change in Control or any person
affiliated with Corporation or such person, or to pay Officer any portion of
an installment of deferred compensation under any deferred compensation
program of Corporation, within seven (7) days of the date such compensation
is due;
(e) the failure by Corporation to continue in effect any
compensation plan in which Officer participates immediately prior to the
Change in Control which is material to Officer's total compensation, unless
an equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure by Corporation
to continue Officer's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of participation relative to
other participants, as existed at the time of the Change in Control;
(f) the failure by Corporation to continue to provide Officer
with benefits substantially similar to those under any of Corporation's life
insurance, medical, health and accident, or disability plans in which Officer
was participating at the time of the Change in Control, the taking of any
action by Corporation which would directly or indirectly materially reduce
any of such benefits or deprive Officer of any material fringe benefit
enjoyed by him at the time of the Change in Control, or the failure by
Corporation to provide Officer with the number of paid vacation days to which
he is entitled on the basis of years of service with Corporation in
accordance with Corporation's normal vacation policy, in effect at the time
of the Change in Control; or
(g) the failure of Corporation to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement.
Officer's right to terminate Officer's employment for Good Reason
shall not be affected by Officer's incapacity due to physical or mental
illness. Officer's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
4.3 EFFECT OF TERMINATION. In the event that this Agreement is
terminated by Corporation or Officer prior to the Termination Date in
accordance with the provisions of this Paragraph 4, the obligations and
covenants of the parties under this Paragraph 4 shall be of no further force
and effect, except for the obligations of the parties set forth below in this
Paragraph 4.3, and such other provisions of this Agreement which shall
survive termination of
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this Agreement as provided in Paragraph 6.11 below. Except as otherwise
specifically set forth, all amounts due upon termination shall be payable on
the date such amounts would otherwise have been paid had the Agreement
continued through its Term; PROVIDED, HOWEVER, that Deferred Amounts (as
defined in Paragraph 4.3(a)(i) below) shall be payable within thirty (30)
days following the Early Termination Date. In the event of any such early
termination in accordance with the provisions of this Paragraph 4.3, Officer
shall be entitled to the following:
(a) TERMINATION BY CORPORATION.
(i) TERMINATION WITHOUT CAUSE. In the event that Corporation
terminates this Agreement without Cause pursuant to Paragraph 4.1(a) above,
Officer shall be entitled to (i) Earned Base Salary; (ii) earned benefits and
reimbursable expenses; (iii) any earned bonus which Officer has been awarded
pursuant to the terms of this Agreement or any other plan or arrangement as of
the Early Termination Date, but which has not been received by Officer as of
such date; (iv) any compensation earned but deferred ("Deferred Amounts"); and
(v) the Severance Payment (as defined in Paragraph 4.4 below).
(ii) TERMINATION FOR CAUSE, DEATH OR PERMANENT DISABILITY. In
the event that Corporation terminates this Agreement for Cause pursuant to
Paragraph 4.1(b) above or by reason of Permanent Disability or death pursuant to
Paragraph 4.1(c) above, Officer shall be entitled to (i) Earned Base Salary;
(ii) any earned bonus which Officer has been awarded pursuant to the terms of
this Agreement or any other plan or arrangement as of the Early Termination
Date, but which has not been received by Officer as of such date; (iii) earned
benefits and reimbursable expenses; and (iv) any Deferred Amounts. Officer
shall not be entitled to any future annual bonus or Severance Payment.
(b) TERMINATION BY OFFICER.
(i) TERMINATION OTHER THAN FOR GOOD REASON. In the event that
Officer terminates this Agreement other than for Good Reason, Officer shall be
entitled to (i) Earned Base Salary; (ii) any earned bonus which Officer has been
awarded pursuant to the terms of this Agreement or any other plan or arrangement
as of the Early Termination Date, but which has not been received by Officer as
of such date; (iii) earned benefits and reimbursable expenses; and (iv) any
Deferred Amounts. Officer shall not be entitled to any future annual bonus or
Severance Payment.
(ii) TERMINATION FOR GOOD REASON. In the event that Officer
terminates this Agreement for Good Reason, Officer shall be entitled to (i)
Earned Base Salary; (ii) earned benefits and reimbursable expenses; (iii) any
earned bonus which Officer
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has been awarded pursuant to the terms of this Agreement or any other plan or
arrangement as of the Early Termination Date, but which has not been received
by Officer as of such date; (iv) any Deferred Amounts; and (v) the Severance
Payment (as defined in Paragraph 4.4 below).
4.4 SEVERANCE PAYMENT.
(a) DEFINITION OF "SEVERANCE PAYMENT." For purposes of this
Agreement, the term "Severance Payment" shall mean an amount equal to the sum
of (i) the Base Salary otherwise payable to Officer during the remainder of
the Term had such early termination of this Agreement not occurred (the
"Severance Period") and (ii) for each full year remaining in the Severance
Period, the average of the annual bonuses earned by Officer in the two (2)
years immediately preceding the date of termination (or if there are less
than two (2) years immediately preceding such date, an amount equal to the
immediately preceding bonus earned) (the "Average Bonus"); PROVIDED, HOWEVER,
that in the event that, following a Change in Control (as defined in
Paragraph 4.4(e) below), Officer terminates this Agreement for Good Reason
pursuant to Paragraph 4.2(b) above, the term "Severance Payment" shall mean
three (3) times the sum of the Base Salary then in effect and the Average
Bonus; FURTHER, PROVIDED, HOWEVER, that in the event that (i) Officer's
employment is terminated in connection with or following the Board's good
faith determination that the possible long-run loss of Corporation may
reasonably be expected to increase unreasonably if Corporation is not
dissolved and (ii) such dissolution is effected in accordance with applicable
law, the term "Severance Payment" shall mean the Base Salary then in effect,
and the term "Severance Period" shall mean the one-year period immediately
following Officer's date of termination of employment.
(b) PAYMENT OF SEVERANCE PAYMENT. In the event that Officer is
entitled to any Severance Payment pursuant to Paragraph 4.3 above, that
portion of such Severance Payment that represents Base Salary shall be
payable in monthly installments, and that portion of such Severance Payment
that represents the Average Bonus shall be payable on the dates such amounts
would have been paid had Officer continued in Corporation's employment for
the Severance Period; PROVIDED, HOWEVER, that in the event of a Termination
upon a Change in Control (as defined in Paragraph 4.4(e) below), the
Severance Payment shall be payable in a lump sum within ten (10) days
following such termination.
(c) OTHER SEVERANCE BENEFITS. In the event that Officer is
entitled to any Severance Payment pursuant to Paragraph 4.3 above, he shall
also be entitled to full and
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immediate vesting of any awards granted to Officer under Corporation's stock
option or incentive compensation plans, and continued participation
throughout the Severance Period in all employee welfare and pension benefit
plans, programs or arrangements. In the event Officer's participation in any
such plan, program or arrangement is barred, Corporation shall arrange to
provide Officer with substantially similar benefits.
(d) FULL SETTLEMENT OF ALL OBLIGATIONS. Officer hereby acknowledges
and agrees that any Severance Payment paid to Officer hereunder shall be
deemed to be in full and complete settlement of all obligations of
Corporation under this Agreement.
(e) CHANGE IN CONTROL. For purposes of this Agreement, "Termination
Upon a Change in Control" shall mean a termination of Officer's employment
with Corporation following a "Change in Control" by Officer for Good Reason
or by Corporation Other Than for Cause. A "Change in Control" shall be
deemed to have occurred if:
(i) Any Person, as such term is used in section 3(a)(9) of
the Securities Exchange Act of 1934 as amended from time to time (the "Exchange
Act"), as modified and used in sections 13(d) and 14(d) thereof, except that
such term shall not include (A) the Corporation or any of its subsidiaries, (B)
a trustee or other fiduciary holding securities under an employee benefit plan
of the Corporation or any of its affiliates, (C) an underwriter temporarily
holding securities pursuant to an offering of such securities, (D) a corporation
owned, directly or indirectly, by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation, or (E) a person or group as used in Rule 13d-1(b) under the
Exchange Act, that is or becomes the Beneficial Owner, as such term is defined
in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of
the Corporation (not including in the securities beneficially owned by such
Person any securities acquired directly from the Corporation or its affiliates
other than in connection with the acquisition by the Corporation or its
affiliates of a business) representing twenty-five percent (25%) or more of the
combined voting power of the Corporation's then outstanding securities; or
(ii) The following individuals cease for any reason to
constitute a majority of the number of directors then serving: individuals who,
on the date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Corporation) whose
appointment or election by the Board or nomination for election by the
Corporation's stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in
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office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii) There is consummated a merger or consolidation of
the Corporation with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities under
an employee benefit plan of the Corporation or any subsidiary of the
Corporation, at least seventy-five percent (75%) of the combined voting power
of the securities of the Corporation or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Corporation
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Corporation or its affiliates other
than in connection with the acquisition by the Corporation or its affiliates
of a business) representing twenty-five percent (25%) or more of the combined
voting power of the Corporation's then outstanding securities; or
(iv) The stockholders of the Corporation approve a plan
of complete liquidation or dissolution of the Corporation or there is
consummated an agreement for the sale or disposition by the Corporation of
all or substantially all of the Corporation's assets, other than a sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets to an entity, at least seventy-five (75%) of the
combined voting power of the voting securities of which are owned by
stockholders of the Corporation in substantially the same proportions as
their ownership of the Corporation immediately prior to such sale.
4.5 GROSS-UP. If any of the Total Payments (as hereinafter
defined) will be subject to the tax imposed by Section 4999 of the Code (the
"Excise Tax"), Corporation shall pay to Officer, no later than the tenth
(10th) day following the Early Termination Date, an additional amount (the
"Gross-Up Payment") such that the net amount retained by him, after deduction
of any Excise Tax on the Total Payments and any federal and state and local
income tax upon the payment provided for by this Paragraph, shall be equal to
the excess of the Total Payments over the payment provided for by this
Paragraph. For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) all
payments or benefits received or to be received by Officer in connection with
a Change in Control or the termination of Officer's employment (whether
payable pursuant to the terms of this Agreement or of any other plan,
arrangement or agreement with
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Corporation, its successors, any person whose actions result in a Change in
Control or any person affiliated (or which, as a result of the completion of
the transactions causing a Change in Control, will become affiliated) with
Corporation or such person within the meaning of Section 1504 of the Code
(the "Total Payments")) shall be treated as "parachute payments" (within the
meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax
counsel selected by Corporation's independent auditors and reasonably
acceptable to Officer, such payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of Section 280G(b)(4)(A)
of the Code, and all "excess parachute payments" (within the meaning of
Section 280G(b)(1) of the Code) shall be treated as subject to the Excise
Tax, unless in the opinion of such tax counsel such excess parachute payments
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4)(B) of the Code, or are not otherwise subject to
the Excise Tax, and (ii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Corporation's independent
auditors in accordance with the principles of Sections 280G(d)(3) and (4) of
the Code. For purposes of determining the amount of the Gross-Up Payment,
Officer shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the residence of
Officer on the Early Termination Date, net of the maximum reduction in
federal income taxes that could be obtained from deduction of such state and
local taxes.
4.6 OFFSET. Although Officer shall not be required to mitigate
damages under this Agreement by seeking other comparable employment or
otherwise, the amount of any payment or benefit provided for in this
Agreement, including, without limitation, welfare benefits, shall be reduced
by any compensation earned by or provided to Officer as the result of
employment by an employer other than Corporation prior to the expiration of
the Term of this Agreement; PROVIDED, HOWEVER, that this Paragraph 4.6 shall
not apply in the event of a Termination Upon a Change in Control.
5. NONCOMPETITION.
During the Term of this Agreement, including the period, if any, with
respect to which Officer shall be entitled to Severance Payments, Officer shall
not engage in any activity competitive with the business of Corporation.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. Corporation's obligation to pay Officer the
compensation and to make the arrangements provided herein shall be
unconditional, and
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Officer shall have no obligation whatsoever to mitigate damages hereunder.
If arbitration after a Change in Control shall be brought to enforce or
interpret any provision contained herein, Corporation shall, to the extent
permitted by applicable law and Corporation's Articles of Incorporation and
By-Laws, indemnify Officer for Officer's attorneys' fees and disbursements
incurred in such arbitration.
6.2 CONFIDENTIALITY. Officer agrees that all confidential and
proprietary information relating to the business of Corporation shall be kept
and treated as confidential both during and after the Term of this Agreement,
except as may be permitted in writing by the Board or as such information is
within the public domain or comes within the public domain without any breach
of this Agreement.
6.3 WAIVER. The waiver of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.4 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise provided
herein, this Agreement (together with the agreements and plans referred to
herein) represents the entire understanding among the parties with respect to
the subject matter hereof, and this Agreement supersedes any and all prior
understandings, agreements, plans and negotiations, whether written or oral,
with respect to the subject matter hereof, including, without limitation, any
understandings, agreements or obligations respecting any past or future
compensation, bonuses, reimbursements or other payments to Officer from
Corporation. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.5 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by facsimile or first-class
mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three (3) days after mailing or twenty-four
(24) hours after transmission of a facsimile to the respective persons named
below:
If to Corporation: Alexandria Real Estate Equities, Inc.
251 South Lake Avenue
Pasadena, California 91101
Phone: (818) 578-6812
Facsimile: (818) 578-6966
If to Officer: Gary A. Kreitzer
13
17511 Caminito Canasto
San Diego, California 92127
Phone: (619) 485-9425
Any party may change such party's address for notices by notice duly given
pursuant hereto.
6.6 HEADINGS. The Paragraph headings herein are intended for
reference only and shall not by themselves determine the construction, or
interpretation of this Agreement.
6.7 GOVERNING LAW. Other than with respect to Paragraph 6.13
below, this Agreement shall be governed by and construed in accordance with
the laws of the State of California without regard to its principles of
conflict of laws.
6.8 ARBITRATION. Any dispute arising out of or relating to this
Agreement that cannot be settled by good faith negotiation between the
parties shall be submitted to ENDISPUTE for final and binding arbitration
pursuant to ENDISPUTE's Arbitration Rules incorporated herein by reference,
which arbitration shall be the exclusive remedy of the parties hereto. The
resulting arbitration shall be deemed a final order of a court having
jurisdiction over the subject matter, shall not be appealable, and shall be
enforceable in any court of competent jurisdiction. Submission to
arbitration, as provided in Exhibit A, shall not preclude the right of any
party hereto involved in a dispute regarding this Agreement (each a
"Disputing Party" and collectively, the "Disputing Parties") to institute
proceedings at law or in equity for injunctive or other relief pending the
arbitration of a matter subject to arbitration pursuant to this Agreement.
Any documentation and information submitted by any party in the arbitration
proceeding shall be kept strictly confidential by the parties and the
arbitrator.
In addition to any other relief or award granted by the arbitrator
to either Disputing Party, the arbitrator shall determine the extent to which
each Disputing Party has prevailed as to the material issues raised in the
arbitration, and, based upon such determination, shall apportion to each
Disputing Party its ratable share of (i) the Disputing Parties' reasonable
attorneys' fees and other costs reasonably incurred in the arbitration, (ii)
the expense of the arbitrator, and (iii) all other expenses of the
arbitration; PROVIDED, HOWEVER, that any dispute following a Change in
Control shall be governed by the provisions of Paragraph 6.1 above. The
arbitrator shall make such determination and apportionment whether or not the
dispute proceeds to a final award.
6.9 SEVERABILITY. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other
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provisions of this Agreement shall be deemed valid and enforceable to the
extent lawfully permitted.
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6.10 SURVIVAL OF CORPORATION'S OBLIGATIONS. Corporation's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to
Corporation. This Agreement shall not be terminated by any merger or
consolidation or other reorganization of Corporation. In the event any such
merger, consolidation or reorganization shall be accomplished by transfer of
stock or by transfer of assets or otherwise, the provisions of this Agreement
shall be binding upon and inure to the benefit of the surviving or resulting
corporation or person. This Agreement shall be binding upon and inure to the
benefit of the executors, administrators, heirs, successors and assigns of
the parties; PROVIDED, HOWEVER, that except as herein expressly provided,
this Agreement shall not be assignable either by Corporation (except to an
affiliate of the Corporation, in which event Corporation shall remain liable
if the affiliate fails to meet any obligations to make payments or provide
benefits or otherwise) or by Officer.
6.11 SURVIVAL OF CERTAIN RIGHTS AND OBLIGATIONS. The rights and
obligations of the parties hereto pursuant to Paragraphs 4.3, 4.4, 4.5, 4.6,
5 and 6.1, 6.2, 6.10, 6.11 and 6.13 hereof shall survive the termination of
this Agreement.
6.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.
6.13 INDEMNIFICATION. In addition to any rights to indemnification
to which Officer is entitled under the Corporation's Articles of
Incorporation and By-Laws, Corporation shall indemnify Officer at all times
during and after the Term of this Agreement to the maximum extent permitted
under Section 2-418 of the General Corporation Law of the State of Maryland
or any successor provision thereof and any other applicable state law, and
shall pay Officer's expenses in defending any civil or criminal action, suit,
or proceeding in advance of the final disposition of such action, suit, or
proceeding, to the maximum extent permitted under such applicable state laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
CORPORATION:
ALEXANDRIA REAL ESTATE EQUITIES, INC.,
a Maryland corporation
By: /s/ JOEL S. MARCUS
------------------------------------
Joel S. Marcus
Chief Executive Officer
Date: 6-2-97
-----------------------------------
OFFICER:
/s/ GARY A. KREITZER
-----------------------------------------
Gary A. Kreitzer
Date: 7-22-97
------------------------------------
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