CHANGE OF CONTROL AGREEMENT
This Agreement dated as of June 9, 1993 between HRE
Properties (the "Trust") and Willing ▇. ▇▇▇▇▇▇ ("Employee").
The Employee is currently employed by the Trust and the
Employee's services are valued by the Trust.
The Trust recognizes that the possibility of a change
of control of the Trust may result in the departure or
distraction of the Employee, to the detriment of the Trust
and its shareholders.
The Trust wishes to assure the Employee of fair severance
should his employment terminate in certain specified
circumstances following a change of control.
In consideration of the Employee' continued employment
by the Trust, and for other good and valuable consideration,
the parties hereto hereby agree as follows:
1. Termination Benefits. If the employment of
the Employee is terminated by the Employee for
Good Reason or by the Trust for any reason
other than for Cause, within 18 months following
a Change of Control,
(a) the Trust shall pay Employee an amount
equal to 6 months of Employee's rate of
base salary (exclusive of any bonus or
other benefit) in effect at the date of
the Change of Control. Such amount
shall be payable in cash in a lump sum
within 45 days after such termination;
and
(b) the Trust shall continue in force and
effect for 6 months after termination
(the "Continuation of Benefits Period")
an at the same level and for the benefit
of the Employee's family, where applicable,
all life insurance, disability,
medical and other benefit programs or
arrangements in which the Employee is
participating or to which the Employee
is entitled at the date of the Change of
Control, provided that the Employee's
continued participation is possible
under such programs and arrangements.
In the event that such continued participation
is not possible, the Trust shall
arrange to provide the Employee with
benefits similar to those which Employee
would be entitled to receive under such
programs and arrangements. Without
limiting the foregoing, the benefits
continuation shall include a lump sum
cash payment to the Employee within 45
days of such termination in lieu of
Trust contributions on behalf of the
Employee under the HRE Properties Profit
Sharing and Savings Plan. the amount of
such payment shall be the product of (i)
the number of months in the Continuation
of Benefits Period and (ii) 1/12 of 7%
(or such other percentage reflected in
the Trust's most recent annual contribution
determined prior to the Change of
Control) times the Employee's annual
salary rate in effect immediately prior
to the termination date or, if greater,
the Employee's annual salary rate in
effect immediately prior to the Change
of Control.
Payments under this Section 1 shall be reduced
to the extent, but only the extent, necessary
to provide that no "payment in the nature of
compensation" to (or for the benefit of) the
Employee which is "contingent" on the Change
of Control would fail to be deductible for
federal income tax purposes by reason of section
280G of the Internal Revenue Code of
1986, as amended (the "Code"). As used in
this Section, the words "payment in the nature
of compensation" and "contingent" shall be
construed and applied in a manner consistent
with the meaning of those words under section
280G of the code and regulations thereunder.
The determination as to whether and to what
extent a reduction in payments under this
Section 1 is necessary to avoid the nondeductibility
of any payment under section 280G of
the Code shall be made at the Trust's expense
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or by such other
certified public accounting firm as the Compensation
Committee of the Trustees may designate
prior to a Change of Control. In the
event of any underpayment or overpayment under
this Section 1, as determined by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
(or such other firm as may have been
designated in accordance with the preceding
sentence), the amount of such underpayment or
overpayment shall forthwith be paid to the
Employee or refunded to the Trust, as the case
may be, with interest rate at the applicable
federal rate provided for in section 7872(f)(-2) of the Code.
2. Definitions. The definitions in Appendix A
are hereby incorporated in this Agreement.
3. No Duty to Mitigate Damages. The Employee's
benefits under this Agreement shall be considered
severance pay in consideration of his
past service and his continued service from
the date of this Agreement, and his entitlement
thereto shall neither be governed by any
duty to mitigate his damages by seeking further
employment nor offset by any compensation
which he may receive from future employment.
4. Withholding. Anything herein to the contrary
notwithstanding, all payments required to be
made by the Trust hereunder to the Employee
shall be subject to the withholding of such
amounts, if any, relating to tax and other
payroll deductions as the Trust may reasonably
determine it should withhold pursuant to any
applicable law or regulation.
5. Legal Fees and Expenses; Interest. The Trust
shall pay all reasonable legal fees and expenses
incurred by the Employee in successfully
obtaining any right or benefit to which
the Employee is entitled under this Agreement.
Any amount payable under this Agreement that
is not paid when due shall accrue interest at
the base rate as from time to time in effect
at the First National Bank of Boston, until
paid in full.
6. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement
shall be settled exclusively by arbitration in
New York City in accordance with the rules of
the American Arbitration Association then in
effect. The parties shall attempt to select a
mutually agreeable arbitrator who shall promptly
convene a hearing to resolve submitted
disputes. If the parties are unable to agree
upon such an arbitrator within 20 days from
initial contact, the American Arbitration
Association shall be requested by either party
to submit a list of at least seven arbitrators
from which the parties shall attempt to select
one by agreement. In the event they do
not so agree, they shall alternately strike
names from this list beginning with the Employee,
until a single name remains. The
remaining person shall be appointed to hear
and decide the parties' disputes, drawing his
authority and the bases for decision from this
Agreement. The arbitrator will resolve all
submitted matters in a written decision with
expedition. Judgement may be entered on the
arbitrator's award in any court having jurisdiction.
7. Notices. All notices shall be in writing and
shall be deemed given five days after mailing
in the continental United States by registered
or certified mail, or upon personal receipt
after delivery, telex, telecopy or telegram,
to the party entitled thereto at the address
stated below or to such changed address as the
addressee may have given by a similar notice:
To the Trust: HRE Properties
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
To the Employees: At his home address,
as last shown on the
records of the Trust
8. Severability. In the event that any provision
of this Agreement shall be determined to be
invalid or unenforceable, such provision shall
be enforceable in any other jurisdiction in
which valid and enforceable and in any event
the remaining provisions hereof shall remain
in full force and effect to the fullest extent
permitted by law.
9. Binding Agreement. This Agreement shall be
binding upon and inure to the benefit of the
parties and be enforceable by the Employee's
personal or legal representatives or successors.
If the Employee dies while any amounts
would still be payable to him hereunder, such
amounts shall be paid to the Employee's estate.
This Agreement shall not otherwise be
assignable by the Employee.
10. Successors. This Agreement shall inure to and
be binding upon the Trust's successors. The
Trust will require any successor to all or
substantially all of the businesses and/or
assets of the Trust by sale, merger (where the
Trust is not the surviving entity), lease or
otherwise, to assume expressly this Agreement.
If the Trust shall not obtain such
agreement prior to the effectiveness of any
such succession, the Employee shall have all
rights resulting from termination of the Employee's
employment under this Agreement. This
Agreement shall not otherwise be assignable by
the Trust.
11. Amendment or Modification; Waiver. This Agreement
may not be amended unless agreed to in
writing by the Employee and the Trust. No
waiver by either party of any breach of this
Agreement shall be deemed a waiver of a subsequent breach.
12. Continued Employment. This agreement shall
not confer upon the Employee any right of
continued or further employment by the Trust
or any right to compensation or benefits from
the Trust except the right specifically stated
herein to certain severance benefits, and
shall not limit the right of the Trust to
terminate the Employee's employment at any
time, except as may be otherwise provided in a
written employment agreement between the Trust
and the Employee.
13. Governing Law. The validity, interpretation,
performance and enforcement of this Agreement
shall be governed by the law of The Commonwealth
of Massachusetts.
14. Liability of Shareholders. This Agreement is
executed by or on behalf of the Trustees of
the Trust solely in their capacity as such
Trustees, and shall not constitute their personal
obligation either jointly or severally
in their individual capacities. The shareholders,
Trustees, officers or agents of the
Trust shall not be personally liable for any
obligations of the Trust under this Agreement
and all parties hereto shall look solely to
the property of the Trust for the payment of
any claim hereunder.
IN WITNESS WHEREOF the parties have duly executed the
Agreement as of the above date.
/s/WILLING ▇. ▇▇▇▇▇▇
Employee:
Willing ▇. ▇▇▇▇▇▇
HRE PROPERTIES
By:/s/▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Title: President
APPENDIX A TO CHANGE OF CONTROL AGREEMENT
"Change of Control" shall mean the occurrence of any
one of the following events:
(a) any Person becomes the owner of 20% or more of
the Trust's Common Shares and thereafter individuals
who were not Trustees of the Trust
prior to the date such Person became a 20%
owner are elected as Trustees pursuant to an
arrangement or understanding with, or upon the
request of or nomination by, such Person and
constitute at least two of the Trustees; or
(b) there occurs a change of control of the Trust
of a nature that would be required to be reported
in response to Items 1a of Form 8-K
pursuant to Section 13 or 15 under the Securities
Exchange Act of 1934 ("Exchange Act"), or
in any other filing by the Trust with the
Securities and Exchange Commission (the "Commission"); or
(c) there occurs any solicitation of proxies by or
on behalf of any Person other than the Trustees
of the Trust and thereafter individuals
who were not Trustees prior to the commencement
of such solicitation are elected as Trustees
pursuant to an arrangement or understanding
with, or upon the request of or nomination
by, such Person and constitute at least two of
the Trustees.
(d) the Trust executes an agreement of acquisition,
merger or consolidation which contemplates
that (i) after the effective date provided for
in the agreement, all or substantially
all of the business and/or assets of
the Trust shall be owned, leased or otherwise
controlled by another corporation or other
entity and (ii) individuals who are trustees
of the Trust when such agreement is executed
shall not constitute a majority of the trustees
or board of directors of the survivor or
successor entity immediately after the effective
date provided for in such agreement;
provided, however, for purposes of this paragraph (c)
that if such agreement requires as a
condition precedent approval by the Trust's
shareholders of the agreement or transaction,
a Change of Control shall not be deemed to
have taken place unless and until such approval is secured.
"Common Shares" shall mean the then outstanding Common
Shares of the Trust plus, for purposes of determining the
ownership of any Person, the number of unissued shares of
Common Shares which such Person has the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) upon the exercise of conversion rights,
exchange rights, warrants or options or otherwise.
"Person" shall have the meaning used in Section 13(d)
of the Exchange Act, as in effect on December 31, 1984. A
Person shall be deemed to be the "owner" of any common
Shares:
(a) of which such Person would be the "beneficial
owner", as such term is defined in Rule 13d-3
promulgated by the Commission under the Exchange
Act, as in effect on December 31, 1984;or
(b) of which Person would be the "beneficial owner",
as such term is defined under Section 16
of the Exchange Act and the rules of the Commission
promulgated thereunder, as in effect
on December 31, 1984; or
(c) which such Person or any of its Affiliates or
Associates (as such terms are defined in Rule
12b-2 promulgated by the Commission under the
Exchange Act, as in effect on December 31,
1984), has the right to acquire (whether such
right is exercisable immediately or only after
the passage of time) pursuant to any agreement,
arrangement or understanding or upon the
exercise of conversion rights, exchange
rights, warrants or options or otherwise.
Termination for "Cause" shall mean termination of the
Employee's employment by the Trust because of dishonesty,
conviction of a felony, gross neglect of duties (other than
as a result of disability or death), or conflict of interest
(other than any conflict of interest which has been fully
disclosed to the Trustees and has been determined by them
not to be material), which, in the case of gross neglect or
conflict, shall continue for 30 days after the Trust gives
written notice to the Employee requesting the cessation of
such gross neglect or conflict, as the case may be.
Termination for "Good Reason" shall have the following
meanings.
Termination for "Good Reason" shall mean the voluntary
termination by the Employee of his employment within 90 days
after the occurrence of any one of the following events
without the Employee's express written consent:
(a) the assignment to him of any duties inconsistent
with his positions, duties, responsibilities,
reporting requirements, and status with
the Trust immediately prior to a Change of
Control, or a substantive change in the
Employee's titles or offices as in effect immediately
prior to a Change of Control, or any
removal of the Employee from or any failure to
reelect him to such positions, except in connection
with the termination of the Employee's
employment by the Trust for Cause or by the
Employee other than for good Reason; or any
other action by the Trust which results in a
diminishment in such position, authority,
duties or responsibilities, other than an
insubstantial and inadvertent action which is
remedied by the Trust promptly after receipt
of notice thereof given by the Employee; or
(b) if the Employee's base salary for any fiscal
year is less than 100 percent of the base
salary paid to the Employee in the completed
fiscal year immediately preceding the Change
of Control, or if the Employee's total cash
compensation opportunities, including salary
and incentives, for any fiscal year are less
than 100 percent of the total cash compensation
opportunities made available to the
Employee in the completed fiscal year immediately
preceding the Change of Control; or
(c) the failure of the Trust to continue in effect
any benefits or perquisites, or any pension,
life insurance, medical insurance or disability
plan in which the Employee was participating
immediately prior to a Change of control
unless the Trust provides the employee with a
plan or plans that provide substantially similar
benefits, or the taking of any action by
the Trust that would adversely affect the
Employee's participation in or materially
reduce the Employee's benefits under any of
such plans or deprive the Employee of any
material fringe benefit enjoyed by the Employee
immediately prior to a Change of Control; or
(d) any relocation of the Employee outside Manhattan
in New York City; or
(e) the Trust sells or otherwise disposes of, in
one transaction or a series of related transactions,
assets or earning power aggregating
more than 50% of the assets (taken at asset
value as stated on the books of the Trust
determined in accordance with generally accepted
accounting principles consistently
applied) or earning power of the Trust to any
other Person or Persons; or
(f) any other breach by the Trust of any provision
of this Agreement, provided that the same
shall have continued unremedied for a period
of 30 days after the Employee gives notice to
the Trust requesting that the Trust remedy the
same.