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EXHIBIT 10b
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is made and entered into
as of the 16th day of September, 1996, by and among ▇▇▇▇▇▇ Income Properties I,
Ltd., a Texas limited partnership ("MIP I"), ▇▇▇▇▇▇ Income Properties II, Ltd.,
a Texas limited partnership ("MIP II"), and W. ▇▇▇▇▇ ▇▇▇▇ ("Employee"). MIP I
and MIP II are individually referred to herein as a "Partnership" and
collectively as the "Partnerships."
Employee is currently employed by MIP II and provides services to both
MIP I and MIP II pursuant to an expense sharing arrangement as further
described in Section 2 of this Agreement. Employee has been employed by, or
provided services to, the Partnerships since November 15, 1989. The General
Partners (as defined below) of the Partnerships each acknowledge that both
Partnerships will in the future terminate through merger, sale of assets or
other action of the limited partners and that given the structure of the
business operations of the Partnerships and the duties and experience of
Employee, the loss of Employee's services prior to final Termination (as
defined below) of each Partnership could cause a serious disruption of the
Partnerships' business activities and may cause a material adverse effect upon
the value of the Partnerships' assets. In order to encourage Employee to
remain employed by or provide services to, as applicable, the Partnerships
through their respective Termination, and in order to maximize the value of the
Partnerships' assets, the General Partners, on behalf of the Partnerships, and
Employee desire to enter into this Agreement providing severance benefits to
Employee. For and in consideration of the foregoing and the mutual promises
hereinafter contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SEVERANCE BENEFITS. (a) Subject to Section 2 below, upon
termination of Employee's Full Time (as defined below) duties to a Partnership
involuntarily as a direct result of the Termination of such Partnership, except
by reason of Employee's death, permanent disability or for Cause (as defined
below), such Partnership shall pay to Employee an amount equal to the value of
the aggregate of one month of Employee's highest monthly salary paid to
Employee by MIP II at any time during the twelve months prior to Employee's
termination (the "Termination Date") multiplied by twelve (12), plus the
current monthly cost of such health, disability and life benefits (including
spousal or similar coverage and coverage for children) which Employee was
receiving or entitled to receive immediately prior to the Termination Date
multiplied by fourteen (14), which shall be in addition to and not in
substitution for any health, disability and life benefits or coverage to which
Employee may be otherwise entitled under applicable state and federal law (the
"Severance Payment"). Any Severance Payment due and owing to Employee as
calculated above shall be payable in cash in one lump sum payment within 30
days of the Termination Date. In the event of a Change in Control (as defined
below), such Partnership shall pay to Employee one-half of the Severance
Payment as calculated above. If within one year following a Change in Control
Employee's Full Time duties are terminated for any reason, whether voluntarily
or involuntarily, such Partnership shall pay to Employee the remaining one-half
of the Severance Payment. Any Severance Payment due and owing to Employee as
calculated above shall be payable in cash in one lump sum payment within 30
days of the date of the Change in Control or the Termination Date, as
applicable.
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(b) The Partnerships shall have a right of set-off in respect of
any claim, debt or obligation against any payment to or benefit for Employee
provided for in this Agreement.
(c) The Partnerships agree to make a good faith effort to maintain
Employee's monthly base salary and health, disability and life benefits
applicable as of the date of this Agreement, subject to prevailing market
conditions and the financial status of the Partnerships and/or the termination
of Employee's Full Time duties for Cause.
(d) Notwithstanding any other provision hereof, the parties'
respective rights and obligations under this Section 1 and under Section 5
shall survive any termination or expiration of this Agreement following
Termination of either or both of the Partnerships or the termination of
Employee's Full Time duties following a Change in Control for any reason
whatsoever.
2. SHARED EXPENSES. The parties hereto acknowledge that Employee
is employed by MIP II and provides services to both MIP I and MIP II pursuant
to an expense sharing arrangement between the Partnerships whereby MIP I
reimburses MIP II for certain administrative costs, and acknowledge that MIP I
and MIP II are entitled to share expenses relating to the Severance Payment in
the proportions of forty-seven percent (47%) by MIP I and fifty-three percent
(53%) by MIP II. The parties further acknowledge that the Partnerships may be
Terminated at different times and that MIP I and MIP II have agreed to enter
this Agreement acting severally and not jointly with respect to their
respective pro rata obligation to pay severance benefits to Employee. MIP I
and MIP II shall each be liable only for their proportionate share of the
Severance Payment as set forth above (which shall be calculated and fixed once
upon the first Termination or Change in Control event to occur), and only if
and when such Partnership has Terminated or undergone a Change in Control. If
Employee's Full Time duties to MIP II are terminated prior to the termination
of Full Time duties to MIP I, the parties contemplate that Employee will
continue to provide services to MIP I as an employee of MIP I.
3. LIABILITY FOR TAXES. The Partnerships shall have no
responsibility or obligation for any tax liability of Employee attributable to
any Severance Payment made under this Agreement. The Partnerships may withhold
from any such payment such amounts as may be required by applicable provisions
of the Internal Revenue Code, other tax laws, and the rules and regulations of
the Internal Revenue Service and other tax agencies, as in effect at the time
of any such payment.
4. EMPLOYMENT RIGHTS; TERMINATION PRIOR TO LIQUIDATION OR CHANGE
IN CONTROL. Nothing expressed or implied in this Agreement will create any
right or duty on the part of the Partnerships or the Employee to have Employee
remain in the employ of, or provide services to, the Partnerships prior to or
following the commencement of Termination of the Partnerships or any Change in
Control. Any involuntary termination of the Full Time duties of Employee
within 90 calendar days prior to the Termination of a Partnership or a Change
in Control, except by reason of Employee's death, disability or for Cause, will
be deemed to be a termination as a direct result of the Termination of such
Partnership or a Change in Control, as applicable, for purposes of this
Agreement.
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5. LEGAL FEES AND EXPENSES; SECURITY. It is the intent of the
Partnerships that Employee not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense of
Employee's rights to compensation upon a Change in Control by litigation or
otherwise because the cost and expense thereof would substantially detract from
the benefits intended to be extended to Employee hereunder. Accordingly, if it
should appear to Employee that a Partnership has failed to comply with any of
its obligations under this Agreement following a Change in Control or in the
event that a Partnership or any other person takes or threatens to take any
action to declare the agreement to pay Employee compensation upon a Change in
Control void or unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, Employee the benefits provided
or intended to be provided to the Employee hereunder, each Partnership which
has undergone a Change in Control irrevocably authorizes Employee from time to
time to retain counsel of Employee's choice, at the expense of such Partnership
as hereinafter provided, to advise and represent Employee in connection with
any such interpretation, enforcement or defense, including without limitation
the initiation or defense of any litigation or other legal action, whether by
or against such Partnership or any partner, officer, or other person affiliated
with such Partnership, in any jurisdiction. Notwithstanding any existing or
prior attorney-client relationship between such Partnership and such counsel,
such Partnership irrevocably consents to Employee's entering into an
attorney-client relationship with such counsel, and in that connection such
Partnership and Employee agree that a confidential relationship will exist
between Employee and such counsel. Without regard to whether Employee
prevails, in whole or in part, in connection with any litigation or other
action or proceeding initiated against Employee in connection with a Change in
Control, such Partnership will pay and be solely financially responsible for
any and all Expenses (as defined below) incurred by Employee. In connection
with any litigation, action or proceeding initiated by Employee against the
Partnership or any partner, officer, or other person affiliated with such
Partnership, such Partnership will pay and be solely financially responsible
for any and all Expenses incurred by Employee only if Employee is the
prevailing party. Such payment of Expenses upon conclusion of such proceedings
shall be made by such Partnership as soon as practicable but in any event no
later than 14 days after written demand supported by reasonable documentation
is presented to the Partnership. If so requested by Employee, the Partnership
shall advance (within two business days of written request supported by
reasonable documentation) any and all Expenses to Employee; provided, however,
advancement of expenses in connection with any litigation, action or proceeding
initiated by Employee will be provided only upon receipt of a written
undertaking by or on behalf of Employee to repay such amount if Employee is not
the prevailing party. As used in this Agreement, "prevailing party" shall mean
the party entitled to recover his, her or its cost of such action, suit or
proceeding. If both Partnerships have undergone a Change in Control prior to
the initiation of any such proceedings, the Partnerships shall be entitled to
share pro rata, in accordance with Section 2, the advancement of Expenses.
6. CERTAIN DEFINED TERMS. In addition to terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
(a) "Change in Control" means the occurrence during the term of
this Agreement of any of the following events:
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(i) any person or entity is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), directly or indirectly, of
securities of a Partnership representing 50% or more of the combined
voting power of the then outstanding partnership interests of such
Partnership;
(ii) the incumbent Non-Corporate General Partner (as
defined below), as of the date of this Agreement, ceases for any
reason to be a general partner of a Partnership; provided, however, if
Employee approves of a substitute non-corporate General Partner
elected by the limited partners to replace the incumbent Non-Corporate
General Partner, Employee may waive such event as a Change in Control,
after which this Agreement shall continue in full force and effect;
(iii) a public announcement is made of a tender or exchange
offer by any person or entity for 50% or more of the outstanding
partnership interests of a Partnership, and the General Partners of
such Partnership approve or fail to oppose that tender or exchange
offer in their statements in Schedule 14D-9 under the Exchange Act; or
(iv) the limited partners of a Partnership approve a
merger or consolidation of such Partnership with any other partnership
or other legal entity (or, if no such approval is required, the
consummation of such a merger or consolidation of such Partnership),
other than a merger or consolidation that would result in the
partnership interests of such Partnership outstanding immediately
prior to the consummation thereof continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or of a parent of the surviving entity) a
majority of the combined voting power of the voting securities of the
surviving entity (or its parent) outstanding immediately after that
merger or consolidation.
(b) "Cause" means the following grounds for termination:
(i) any act by Employee of fraud, dishonesty or sexual
harassment with respect to any aspect of the Partnerships' business;
(ii) drug or alcohol abuse;
(iii) failure by Employee to perform Employee's Full Time
job-related duties after notice of such failure and explanation of
such failure of performance, which is reasonably determined by the
General Partners to be materially injurious to the business or
interests of a Partnership or any of its affiliates;
(iv) misappropriation of funds or any corporate
opportunity;
(v) conviction of Employee of a crime of moral turpitude
(or a plea of nolo contendere thereto);
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(vi) acts by Employee attempting to secure or securing any
personal profit not fully disclosed to and approved by the General
Partners in connection with any transaction entered into on behalf of
or involving a Partnership;
(vii) gross, willful or wanton negligence or misconduct or
conduct which constitutes a breach of any fiduciary duty owed to a
Partnership by Employee; or
(viii) conduct on the part of Employee, even if not in
connection with the performance of Employee's Full Time job-related
duties that would result in serious prejudice to the interests of a
Partnership or any of its affiliates and the failure to cease such
conduct within 30 days of receipt of notice to cease such conduct.
(c) "Expenses" means all costs, expenses (including attorneys'
fees) and obligations paid or incurred in connection with investigating,
defending or participating in (including on appeal) any litigation, action or
proceeding pursuant to Section 5 of this Agreement, which is supported by
reasonable documentation and which reasonably relates, in the good faith
judgment of the Non-Corporate General Partner, to such litigation, action or
proceeding.
(d) "Full Time" means the amount of time devoted to partnership
business as necessary, in the opinion of the Non-Corporate General Partner, to
the management of the Partnerships' affairs.
(e) "General Partners" (i) with respect to MIP I, means ▇▇▇▇▇▇
Realty Investors VIII, Inc. and ▇▇▇▇▇▇▇ Partners VIII, Ltd., and (ii) with
respect to MIP II, means ▇▇▇▇▇▇ Realty Investors IX, Inc. and ▇▇▇▇▇▇▇ Partners
IX, Ltd.
(f) "Non-Corporate General Partner" (i) with respect to MIP I,
means ▇▇▇▇▇▇▇ Partners VIII, Ltd., and (ii) with respect to MIP II, means
▇▇▇▇▇▇▇ Partners IX, Ltd.
(g) "Termination" or "Terminated" with respect to a Partnership
means when, in the opinion of the Non- Corporate General Partner, all
partnership business has been concluded and a final tax return filed.
7. TERMINATION. Except with respect to the provisions of this
Agreement that provide for payments to be made to Employee after termination of
Full Time duties as a result of the Termination or Change in Control of a
Partnership, this Agreement shall terminate automatically without further
action by the parties hereto upon the death or permanent disability of Employee
or the termination of Employee's Full Time duties to the Partnerships for any
reason or no reason, in accordance with Employee's status as an employee at
will with MIP II. As used herein, the term "permanent disability" means
physical or mental disability or both that is determined by the General
Partners, in good faith, to substantially impair the ability of Employee to
perform the day-to-day functions normally performed by Employee if the
disability is suffered (or is reasonably expected to be suffered) by Employee
for a period of not less than six consecutive calendar months.
8. REPRESENTATION AND COVENANT BY EMPLOYEE. Employee hereby
represents and warrants to the Partnerships that there are no agreements or
understandings that would make
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unlawful Employee's execution or delivery of this Agreement. Employee further
represents and warrants to the Partnerships that Employee has not entered into
any employment contract with either Partnership and that Employee's employment
relationship with MIP II remains at-will.
9. SEVERABILITY AND REFORMATION. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future law, such provision shall be fully severable, and this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part thereof, the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom,
and in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible, and the Partnerships and Employee hereby request
the court or any arbitrator to whom disputes relating to this Agreement are
submitted to reform the otherwise unenforceable covenant in accordance with
this Section 9.
10. NOTICES. Any notice necessary under this Agreement shall be
in writing and shall be considered delivered three business days after mailing
if sent certified mail, return receipt requested, or when received, if sent by
telecopy, prepaid courier, express mail or personal delivery to the following
addresses:
If to MIP I: ▇▇▇▇▇▇ Income Properties I, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to MIP II: ▇▇▇▇▇▇ Income Properties II, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Employee: At the address set forth on the
signature page hereto.
11. ATTORNEY'S FEES. Except as otherwise expressly provided in
Section 5 above, the prevailing party in any legal or arbitration proceedings
brought by or against the other party to enforce any provision of this
Agreement shall be entitled to recover against the non-prevailing party the
reasonable attorney's fees, court costs and other expenses incurred by the
prevailing party.
12. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein and supersedes all prior conflicting or
inconsistent agreements, consents and understandings relating to such subject
matter. Employee acknowledges and agrees that there is no oral or other
agreement between the Partnerships and Employee which has not been incorporated
in this Agreement.
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13. ASSIGNMENT AND DELEGATION. All rights, covenants and
agreements of the Partnerships set forth in this Agreement shall, unless
otherwise provided herein, be binding upon and inure to the benefit of the
Partnerships' respective successors and assigns. All rights, covenants and
agreements of Employee set forth in this Agreement shall, unless otherwise
provided herein, not be assignable by Employee, and shall be considered
personal to Employee for all purposes.
14. MODIFICATION. This Agreement may be modified only by a
written agreement signed by all parties.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument, and
all of which together shall constitute one and the same Agreement. In making
proof of this Agreement, it shall not be necessary to produce or account for
more than one counterpart executed by the party sought to be charged with
performance hereunder.
16. HEADINGS, GENDER, ETC. The headings used in this Agreement
have been inserted for convenience and do not constitute matter to be construed
or interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (i) words of any gender shall be deemed to
include each other gender; (ii) words using the singular or plural number shall
also include the plural or singular number, respectively; and (iii) the terms
"hereof," "herein," "hereby," "hereto," and derivative or similar words shall
refer to this entire Agreement.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF TEXAS.
18. LIMITATION OF DAMAGES AND ACTIONS. IN NO EVENT WHATSOEVER
SHALL THE PARTNERSHIPS BE LIABLE TO EMPLOYEE FOR ANY INDIRECT, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES RELATING TO ANY ACTION TAKEN BY OR ANY
INACTION OF THE PARTNERSHIPS RELATING TO OR ARISING OUT OF THE SUBJECT MATTER
OF THIS AGREEMENT. IN THE EVENT THIS PROVISION FAILS OF ITS ESSENTIAL PURPOSE
OR WITH RESPECT TO CLAIMS FOR ACTUAL AND DIRECT DAMAGES BROUGHT IN CONNECTION
WITH ANY ACT OR OMISSION HEREUNDER, OR ANY ACT OR OMISSION BY THE PARTNERSHIPS'
AGENTS RELATED TO THIS AGREEMENT, THE PARTNERSHIPS' MAXIMUM LIABILITY HEREUNDER
IS EXPRESSLY LIMITED TO THE SEVERANCE COMPENSATION PAYABLE UNDER THIS AGREEMENT
BY THE PARTNERSHIPS TO EMPLOYEE, AND EACH PARTNERSHIP'S LIABILITY IS FURTHER
EXPRESSLY LIMITED TO SUCH PARTNERSHIP'S PROPORTIONATE SHARE OF EXPENSES AS SET
FORTH IN SECTION 2. ANY ACTION OR ARBITRATION ARISING FROM OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER ACT OR OMISSION BY EITHER PARTY HERETO,
INCLUDING ITS RESPECTIVE AGENTS, MUST BE BROUGHT WITHIN (2) YEARS AFTER THE
CAUSE OF ACTION ARISES AND MUST BE BROUGHT IN DALLAS COUNTY, TEXAS.
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19. INTENTIONAL RISK ALLOCATION. The Partnerships and Employee
each acknowledge that the provisions of this Agreement are negotiated to
reflect an informed voluntary allocation between them of all risks (both known
and unknown) associated with the transactions contemplated by this Agreement.
The warranty disclaimers and limitations contained in this Agreement are
intended to limit the circumstances of liability. The remedy limitations, and
the limitations of liability, are separately intended to limit the forms of
relief available to the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.
▇▇▇▇▇▇ INCOME PROPERTIES I, LTD.
By: ▇▇▇▇▇▇ Realty Investors VIII, Inc.,
a General Partner
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
By: ▇▇▇▇▇▇▇ Partners VIII, Ltd.,
a General Partner
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
▇▇▇▇▇▇ INCOME PROPERTIES II, LTD.
By: ▇▇▇▇▇▇ Realty Investors IX, Inc.
a General Partner
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
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By: ▇▇▇▇▇▇▇ Partners IX, Ltd.,
a General Partner
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
EMPLOYEE
/s/ W. ▇▇▇▇▇ ▇▇▇▇
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W. ▇▇▇▇▇ ▇▇▇▇
Address:87 Meadowlake Cove
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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