Exhibit 10.3
TRIZEC ▇▇▇▇ CORPORATION
- and -
▇▇▇ ▇. ▇▇▇▇▇▇
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EMPLOYMENT AGREEMENT
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Dated as of August 15, 1997
TABLE OF CONTENTS
Page
1. INTERPRETATION........................................................2
1.1 Definitions..................................................2
1.2 Grammatical Variations.......................................6
1.3 Number.......................................................6
1.4 Sections and Headings........................................6
1.5 Severabilitv.................................................7
1.6 Dollars......................................................7
1.7 Schedules....................................................7
1.8 Prior Agreements.............................................7
1.9 Reasonableness of Restrictions...............................7
2. EMPLOYMENT............................................................7
2.1 Continuation of Employment...................................7
2.2 Term.........................................................7
3. DUTIES................................................................8
3.1 Position and Reporting.......................................8
3.2 Duties and Responsibilities..................................8
3.3 Development Committee........................................8
3.4 Full-Time Basis..............................................8
4. COMPENSATION..........................................................9
4.1 Consideration for Services...................................9
4.2 Annual Base Salary...........................................9
4.3 Annual Bonus.................................................9
4.4 Options.....................................................10
4.5 Incentive Awards............................................10
4.6 Expenses....................................................11
4.7 Benefit Plans...............................................11
4.8 Retirement Plans............................................11
4.9 Fringe Benefits.............................................11
4.10 Vacation....................................................11
4.11 Relocation..................................................11
4.12 Deductions and Withholdings.................................11
5. TERMINATION..........................................................12
5.1 Cause.......................................................12
5.2 Disability..................................................12
5.3 Death.......................................................12
5.4 Reasonable Notice...........................................12
5.5 Dismissal without Cause.....................................12
5.6 Good Reason.................................................12
5.7 Voluntary Resignation.......................................12
5.8 Expiry......................................................13
5.9 Termination Entitlement.....................................13
5.10 Full Satisfaction: Resignations and Releases................15
5.11 Statutory Entitlements......................................16
6. LOAN.................................................................16
6.1 Making of Loan..............................................16
6.2 Forgiveness.................................................16
7. EXECUTIVE'S COVENANTS................................................16
7.1 Acknowledgement.............................................16
7.2 Confidential Information....................................17
7.3 Restriction on Solicitations................................17
7.4 Restriction on Competition..................................17
7.5 Return of Materials.........................................18
8. GENERAL..............................................................18
8.1 Notices.....................................................18
8.2 Amendment and Waiver........................................19
8.3 Benefit of Agreement........................................19
8.4 Governing Law...............................................19
8.5 Acknowledgement.............................................19
Schedule A - TrizecHahn Development Group Mandate
Schedule B - Existing Incentive Projects
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EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 15th day of August, ▇▇▇▇,
▇ ▇ ▇ ▇ ▇ ▇ ▇:
TRIZECHAHN CORPORATION,
a corporation existing under the laws of the
Province of Ontario,
(hereinafter referred to as the "Company"),
-and -
▇▇▇ ▇. ▇▇▇▇▇▇,
of the County of St. Louis, in the
State of Missouri,
(hereinafter referred to as the "Executive").
WHEREAS the Company desires to obtain the continuing services of the
Executive for the benefit of the Company and its Associated Companies
(collectively, "TrizecHahn") and the Executive is willing to render such
services on the terms and conditions hereinafter set forth;
AND WHEREAS the Company plans to establish a new division or
subsidiary (the "Development Company") of the Company or of one of its direct or
indirect Subsidiaries that will focus on and be responsible for certain aspects
of the real estate development activities of TrizecHahn in the United States,
Canada and internationally, including the development activities now conducted
by TrizecHahn Centers, Inc., all as more fully described in the attached
Schedule A -TrizecHahn Development Group Mandate;
AND WHEREAS, in return for the compensation and other consideration
provided for herein, the Executive has agreed to provide vision, strategic
direction and overall management as President of the Development Company
pursuant to the terms and conditions of this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the
respective covenants and agreements hereinafter set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party, the parties agree as follows:
1. INTERPRETATION
1.1 Definitions. For the purposes of this Agreement, including the recitals
and the Schedules hereto:
(a) "Actual Return", in respect of any Incentive Project and in
respect of any period of 12 consecutive calendar months during
the period from the Opening of such Incentive Project to the
sixth anniversary of such Opening, means the actual levered
project return, expressed as a percentage, actually achieved or
anticipated by the Development Committee to be achieved for such
Incentive Project during such 12-month period; provided,
however, that if TrizecHahn's interest in the Incentive Project
has been sold, or is subject to a binding agreement of sale,
within five years from the Opening of such Incentive Project
and no Incentive Award has become payable previously in respect
of such Incentive Project, the "Actual Return" in respect of
such Incentive Project means the levered internal rate of
return, expressed as a rate per annum, realized by TrizecHahn
for such Incentive Project; all as determined at such time or
times as the Executive may request using the same methodology as
that used by the Development Committee to calculate the
Projected Return for such Incentive Project;
(b) "Associated Company" means any body corporate in respect of
which the Company owns, directly or indirectly, more than 10% of
the equity through the ownership of securities of the body
corporate or otherwise;
(c) "Board" means the board of directors of the Company;
(d) "Cause" means the occurrence of any of the following:
(i) a material breach by the Executive of this Agreement
which has not been cured within 30 days after written
notice thereof to the Executive by the Company (such
notice to specify in reasonable detail the nature of the
claimed breach and the manner in which the Company
requires such breach to be cured);
(ii) the Executive's wrongful misappropriation of any funds
or property of TrizecHahn or the Development Company;
(iii) the Executive's conviction in a court of law or entering
of a plea of guilty or no contest to any felony or any
crime involving moral turpitude, dishonesty or theft or
the breach of any prohibition or restriction in
applicable securities laws regarding "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇"
and similar matters other than an inadvertent breach
of applicable securities law of a technical nature that
does not give rise
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to any enforcement or other action by any governmental
or regulatory body; or
(iv) the Executive's commission in bad faith of any act which
is conduct that materially damages, or which could
reasonably be expected to materially damage, the
business or reputation of the Development Company or
TrizecHahn;
(e) "Consumer Price Index" means the United States Consumer Price
Index as published by the United States Department of Labor,
Bureau of Labor Statistics, or, in the event such index is
discontinued or ceases to be so published, any successor or
replacement index or publication reasonably selected by the
Company's CEO from time to time in consultation with the
Executive;
(f) "Control" means the ownership of at least a majority of the
votes attaching to the outstanding securities of a body
corporate carrying a right to vote for the election of directors
of such body corporate under all circumstances or under
circumstances that have occurred and are continuing;
(g) "Company" includes any successor to the Company or to
substantially all its real estate development business;
(h) "Company's CEO" means the chief executive officer of the
Company from time to time;
(i) "Compensation Committee" means the Board or any duly empowered
compensation committee thereof;
(j) "Date of Termination" means the effective date of any
termination of the Executive's employment hereunder;
(k) "Development Committee" means a committee consisting of (i) the
Executive, (ii) the Company's CEO and (iii) the chief operating
officer of the Company or any other officer of the Company
designated from time to time by the Company's CEO to serve on
such committee in the place of the chief operating officer of
the Company;
(l) "Development Company" has the meaning set out in the recitals to
this Agreement;
(m) "Development Project" means a real estate development project,
including the expansion of an existing property, proposed for or
undertaken by the Development Company in accordance with the
Mandate;
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(n) "Disability" means the inability of the Executive to perform his
duties hereunder by virtue of illness or physical or mental
incapacity or disability (from any cause or causes whatsoever) in
substantially the manner and to the extent required hereunder
prior to the commencement of such illness, incapacity or
disability and resulting in the Executive's failure to perform
duties for periods aggregating 180 days or more in any continuous
270-day period;
(o) "Effective Date" means August 15, 1997;
(p) "Force Majeure means an act of God, fire, explosion, war, riot or
other event that seriously disrupts or delays the implementation
of an Incentive Project and was beyond the Development Company's
and the Executive's reasonable control and not foreseeable at the
time the Incentive Project was approved by the Development
Committee, but excluding a failure to obtain any necessary
governmental or regulatory approval, permit or authorization;
(q) "Good Reason means:
(i) the assignment to the Executive of any duties inconsistent
with the Executive's position as the chief executive officer
of the Development Company responsible for providing the
vision, strategic direction and overall management of the
Development Company, or any other action by the Company or a
Subsidiary which results in a diminution in such position,
authority, duties or responsibilities, but excluding, in
either case, an insubstantial or inadvertent action not
taken in bad faith and which is remedied by the Company or
the Subsidiary promptly after receipt of written notice
thereof to the Company by the Executive (such notice to
specify in reasonable detail the nature of the claimed
breach and the manner in which the Executive requires such
breach to be cured); or
(ii) any failure by the Company or a Subsidiary to comply with
any other terms of this Agreement, other than an
insubstantial or inadvertent failure not occurring in bad
faith and which is remedied by the Company or the Subsidiary
promptly after receipt of written notice thereof to the
Company by the Executive (such notice to specify in
reasonable detail the nature of the claimed breach and the
manner in which the Executive requires such breach to be
cured);
(r) "Incentive Award" has the meaning set out in Section 4.5;
(s) "Incentive Project" means each of the Development Projects
identified in Schedule B and any other Development Project with
a total overall project cost of at least
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$70,000,000 as hereafter approved as an incentive Project by the
Development Committee, it being understood that any Development
Project on which the Development Company consults but does not
have primary responsibility for the development or expansion
activities would not be designated as an Incentive Project;
(t) "Initial Term" means the period from the Effective Date to the
fifth anniversary of the Effective Date;
(u) "Loan" means the loan to be made to the Executive pursuant to
Section 6.1 in the amount of $2,600,000;
(v) "Mandate" means the Development Company's mandate as described
in Schedule A, as the same may be amended or replaced from time
to time by the Committee with the consent of the Executive, such
consent not to be withheld or delayed unreasonably;
(w) "Market Price" means the closing price of the Shares on The
Toronto Stock Exchange (or, if the Shares are not then listed
and posted for trading on The Toronto Stock Exchange, on such
stock exchange in Canada or the United States on which the
Shares are listed and posted for trading as may be selected for
such purpose by the Board) on the date immediately preceding the
date as of which such determination is being made. In the event
that the Shares did not trade on such immediately preceding
date, the Market Price shall be the average of the bid and ask
prices in respect of the Shares at the close of trading on such
immediately preceding date. In the event that the Shares are not
listed and posted for trading on any stock exchange in Canada or
the United States, the Market Price thereof shall be determined
by the Board, acting reasonably;
(x) "Opening" of any Incentive Project means the earliest date on
which such Incentive Project is generally recognized as open
for business;
(y) "Option" means (i) an option to purchase Shares granted under
the Plan or (ii) a Trizec Option;
(z) "Person" includes, without limitation, an individual,
corporation, partnership, joint venture, association, trust,
firm, unincorporated organization or other legal or business
entity;
(aa) "Plan" means the Amended and Restated 1987 Stock Option Plan of
the Company, as the same may be amended, supplemented or
replaced from time to time;
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(bb) "Projected Return", in respect of any Incentive Project, means
the pro forma levered project return, expressed as a percentage,
for the third year after the Opening of such Incentive Project
or, if applicable, the pro forma levered internal rate of
return, expressed as a rate per annum, to TrizecHahn for such
Incentive Project, all as determined by the Development
Committee at the time such Incentive Project is approved and
designated as an Incentive Project by the Development Committee,
provided that, in either case, such pro forma return shall
disregard any Incentive Award payable hereunder;
(cc) "Return Test", in respect of any Incentive Project, shall be
satisfied if the Actual Return for such Incentive Project as of
any date within the five-year period following the Opening of
such Incentive Project equals or exceeds the Projected Return
for such Incentive Project;
(dd) "Senior U.S. Executives" means the three highest paid U.S.
resident executives (other than the Company's CEO) of TrizecHahn
in the immediately preceding financial year of the Company;
(ee) "Shares" means Subordinate Voting Shares in the capital of the
Company;
(ff) "Subsidiary" means a body corporate which is directly or
indirectly Controlled by the Company;
(gg) "TrizecHahn" has the meaning set out in the recitals to this
Agreement; and
(hh) "Trizec Option" means an option to purchase Shares granted prior
to November 1, 1996 under the stock option plan of what was then
Trizec Corporation Ltd. and that become an option to purchase
Shares by operation of the articles of arrangement of Trizec
Corporation Ltd. certified on November 1, 1996 by the Director
appointed under the Canada Business Corporations Act.
1.2 Grammatical Variations. Grammatical variations of the terms defined in
Section 1.1 shall have corresponding meanings in this Agreement.
1.3 Number. In this Agreement, words importing the singular number only
shall include the plural and vice versa and words importing any gender shall
include all genders.
1.4 Sections and Headings. The division of this Agreement into Sections and
the insertion of headings are for reference purposes only and shall not affect
the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Section or other portion hereof. Unless
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otherwise specified, references herein to Sections and Schedules are to the
specified Sections of or Schedules to this Agreement.
1.5 Severabilitv. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to either party.
1.6 Dollars. Unless otherwise indicated, any reference to dollar amounts in
this Agreement is expressed in United States dollars.
1.7 Schedules. The following Schedules are attached to and form part of
this Agreement:
Schedule A - TrizecHahn Development Group Mandate
Schedule B - Existing Incentive Projects
1.8 Prior Agreements. This Agreement supersedes any and all prior
employment, severance and similar agreements, understandings and communications,
whether written or oral, between the Company or any of its Associated Companies
and the Executive, and the Executive hereby waives and releases all rights and
claims under or in respect of any such prior agreement, understanding or
communication.
1.9 Reasonableness of Restrictions. The Executive hereby confirms and agrees
that the covenants and restrictions pertaining to the Executive contained in
this Agreement, including, without limitation, those contained in Section 7, are
reasonable and valid and hereby further acknowledges and agrees that the Company
would suffer irreparable injury in the event of any breach by the Executive of
his obligations under any such covenant or restriction. Accordingly, the
Executive hereby acknowledges and agrees that damages would be an inadequate
remedy at law in connection with any such breach and that the Company shall
therefore be entitled, in addition to any other right or remedy which it may
have at law, in equity or otherwise, to temporary and permanent injunctive
relief enjoining and restraining the Executive from any such breach.
2. EMPLOYMENT
2.1 Continuation of Employment. The Company hereby agrees to continue the
employment of the Executive as a senior executive of TrizecHahn and to become
the President of the Development Company. The Executive hereby accepts such
employment as of the Effective Date, all in accordance with and subject to the
terms and conditions hereof.
2.2 Term. Unless sooner terminated in accordance with the provisions of
Section 5, the term of the Executive's employment shall be deemed to have
commenced on the Effective Date and
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shall continue for a period of five years from the Effective Date; provided
that, on the first day of each calendar month following the fourth anniversary
of the Effective Date, the term of the Executive's employment shall be extended
automatically until the expiry of the period of 12 consecutive calendar months
commencing on that date unless either party has previously delivered written
notice of non-renewal to the other party.
3. DUTIES
3.1 Position and Reporting. The Executive shall serve as President of the
Development Company and shall be responsible to provide the vision, strategic
direction and overall management of the Development Company in accordance with
the Mandate. The Executive shall also serve as a director or officer of other
Subsidiaries of the Company as requested by the Company's CEO from time to time.
The Executive shall report directly to the Company's CEO at such times and in
such detail as the Company's CEO shall reasonably require.
3.2 Duties and Responsibilities. Subject always to the control and direction
of the Development Committee to the extent provided in this Agreement and the
Board in accordance with the Company's corporate governance practices from time
to time, the Executive shall perform such executive and managerial duties and
responsibilities and shall have such management authority in respect of the
Development Company as are consistent with the duties, responsibilities and
management authority customarily assumed by the chief executive officer of a
significant division or subsidiary of a public company who is responsible for
providing the vision, strategic direction and overall management of that
division or subsidiary. The Executive's duties and responsibilities shall
include those reasonably necessary or incidental to the operations of the
Development Company and assigned to him from time to time by the Company's CEO,
consistent with the Executive's position as designated in Section 3.1. In
furtherance of the foregoing, the Executive shall have responsibility and
authority for the general management, administration, long-term planning and
day-to-day operations of the Development Company in accordance with, and subject
to, the terms, conditions and spirit of the Mandate, including, without
limitation, (i) the development and implementation of the Development Company's
annual operating and financial plan, subject to the prior approval of such plan
by the Development Committee, (ii) the hiring, evaluation and termination of
senior management personnel of the Development Company and (iii) the development
and implementation of the Development Company's compensation and benefit
programs, subject to the prior approval of the Development Committee.
3.3 Development Committee. In addition to the approval rights contemplated
by Section 3.2, the Development Committee shall have joint responsibility and
authority for creating the Development Company's overall development strategy in
accordance with the Mandate, including establishing the Projected Return for
each Incentive Project.
3.4 Full-Time Basis. The Executive's employment hereunder shall be full-time
and exclusive. For so long as he remains employed hereunder, the Executive
agrees that he will (i)
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devote substantially all of his business time and attention, his reasonable best
efforts, and all his skill and ability to promote the interests and goodwill of
the Development Company and TrizecHahn, (ii) carry out his duties in a competent
and professional manner and (iii) work with other employees of the Development
Company and TrizecHahn in a competent and professional manner. Notwithstanding
the foregoing, the Executive shall be permitted to engage in other business
activities (as an active participant or a passive investor), including, without
limitation, serving on civic or charitable boards and committees and performing
speaking engagements, provided that (x) any such business activities are not
rendered for a Person which transacts business with the Development Company or
TrizecHahn or which engages in business competitive with that conducted by the
Development Company or TrizecHahn (excluding the ownership of not more than 1/4
of 1% of the outstanding shares of any class of a corporation that are publicly
traded where the Executive has no involvement in the corporation other than as a
passive investor and excluding any involvement of the Executive in any of
Galleria Partners, L.P., Hycel Partners I, L.P., Crestwood Plaza, L.L.C., any
successor to any such entity or any assignee of any such entity which has been
approved by the Company's CEO, which approval shall not be unreasonably withheld
or delayed) and (y) such civic, charitable, business and other activities, both
individually and collectively, do not interfere with the performance of the
Executive's duties or responsibilities under this Agreement.
4. COMPENSATION
4.1 Consideration for Services. Except as otherwise provided for herein, for
so long as the Executive remains employed hereunder, the Company shall pay and
provide, or cause to be paid and provided, to the Executive the compensation and
benefits set out in this Section 4, and the Executive shall accept the same, as
full compensation and consideration for the performance of the services to be
rendered by him under this Agreement.
4.2 Annual Base Salary. The Executive shall be entitled to a base salary
payable at the rate of $625,000 per annum, subject to adjustment as provided in
this Section. Such base salary shall be payable in installments in accordance
with the usual compensation practices of the Development Company from time to
time. The amount of such base salary as in effect for any immediately preceding
year shall be increased as of January l in each year, commencing in 1998, by at
least the percentage increase in the Consumer Price Index since January 1 of
such immediately preceding year. The base salary amount shall be reviewed
annually by the Compensation Committee.
4.3 Annual Bonus. Each December, the Compensation Committee shall determine,
in its sole discretion, whether the Executive should receive a lump-sum cash
bonus based on the Executive's contributions to the Company and the Development
Company and the amount of any such bonus. The Company acknowledges that, in its
discussions with the Executive, both the Company and the Executive had an
expectation that, if awarded by the Compensation Committee, such bonus would be
targeted at 50%-60% of the Executive's base salary. The Executive acknowledges,
however, that the decision whether to grant a bonus in any given year and, if
granted, the amount of the bonus are both to be determined by the Compensation
Committee in its sole
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discretion. Any such bonus awarded by the Compensation Committee shall be paid
by the Company or the Development Company.
4.4 Options. The Board has approved the grant to the Executive of Options
to purchase 300,000 Shares pursuant to the Plan. In addition, the Executive will
be granted on the next grant date immediately following each of the second,
third, fourth and fifth anniversaries of the Effective Date Options to purchase
an additional 100,000 Shares on each such date, such Options to be granted in
accordance with and subject to the terms and conditions of the Plan. Although
the parties acknowledge that grants of Options are made in the discretion of the
Compensation Committee and the Board, the failure of the Company to grant any
Options required by this Section 4.4 on a timely basis shall be a material
breach of this Agreement.
4.5 Incentive Awards. Following the Opening of each Incentive Project, the
Executive shall receive an incentive award (an "Incentive Award") if the
Incentive Project satisfies its Return Test within five years; provided that, if
TrizecHahn's interest in the Incentive Project is subject to a binding agreement
of sale at the expiry of such five-year period, the period in which such Return
Test may be satisfied shall be extended until the completion or termination of
the sale of TrizecHahn's interest pursuant to such agreement of sale. The amount
of the Incentive Award shall be $1,200,000; provided that if, at the time the
Incentive Project was approved and designated as an Incentive Project by the
Development Committee, the product obtained by multiplying the total overall
project cost of the Incentive Project by TrizecHahn's percentage ownership
interest in the Incentive Project (such product being referred to in this
Section 4.5 as "TrizecHahn's Cost") is less than $50,000,000, the amount of the
Incentive Award shall be $1,200,000 multiplied by the percentage that
TrizecHahn's Cost is of $70,000,000. If the Return Test is not satisfied within
five years following such Opening (subject to extension as provided above where
the Incentive Project is subject to a binding agreement of sale at the expiry of
such five-year period), no Incentive Award shall be payable in respect of such
Incentive Project; provided that, if the Incentive Project fails to satisfy the
Return Test by reason of Force Majeure, the Company and the Executive shall make
such adjustments to the timing, amount or conditions to payment of an incentive
award for such Incentive Project as they may mutually determine to be
appropriate in the circumstances. As soon as reasonably practicable after the
determination that the Return Test has been satisfied, the Incentive Award shall
be satisfied by the issuance of Shares having an aggregate value (based on the
Market Price on the date of issue) equal to the amount of the Incentive Award;
provided, however, that if the Company is prohibited by any legal, regulatory or
stock exchange requirement from issuing such Shares without obtaining
shareholder approval, filing a prospectus or registration statement, preparing
an offering memorandum or complying with any other significant requirement or if
the Company determines, acting reasonably, that it would be inappropriate to
issue Shares at the relevant time by reason of the timing of any proposed
offering of securities by the Company or any of its affiliates, the Company may
elect to satisfy the Incentive Award in cash. The amount of the Incentive Award
shall be increased by the percentage increase in the Consumer Price Index from
the Effective Date to the date on which the Incentive Award becomes payable.
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4.6 Expenses. For so long as he remains employed hereunder, the Executive
shall be reimbursed promptly for all reasonable, ordinary and necessary business
or entertainment expenses incurred in the performance of his services hereunder,
including the travel and moving expenses referred to in Section 4.11. The
Executive shall furnish the Development Company with invoices, statements or
other appropriate supporting documents for all expenses in respect of which the
Executive claims reimbursement in accordance with the Development Company's
usual practices from time to time.
4.7 Benefit Plans. For so long as he remains employed hereunder, the
Executive and, to the extent eligible, his dependants shall be entitled to
participate in and receive all benefits under any benefit plan including any
welfare benefit plans and programs (including, without limitation, medical,
dental, disability, group life (including accidental death and dismemberment)
and business travel insurance plans and programs) now or hereafter provided by
TrizecHahn to the Senior U.S. Executives in accordance with the terms of such
plans and programs as in effect from time to time.
4.8 Retirement Plans. For so long as he remains employed hereunder, the
Executive shall be entitled to participate in all retirement plans and programs
now or hereafter provided by TrizecHahn to the Senior U.S. Executives.
4.9 Fringe Benefits. For so long as he remains employed hereunder, the
Executive shall be entitled to receive fringe benefits and perquisites in
accordance with the plans, practices, programs and policies of TrizecHahn from
time to time in effect which are available generally to the Senior U.S.
Executives, including any automobile allowances.
4.10 Vacation. The Executive shall be entitled to four weeks' paid vacation
during each calendar year to be taken at such time or times as shall not
materially interfere with the Executive's fulfillment of his duties hereunder,
and shall be entitled to as many holidays, sick days and personal days as are in
accordance with the policy then in effect for the Senior U.S. Executives.
4.11 Relocation. Pending the relocation of the Executive's personal
residence to the area of the headquarters of the Development Company, the
Executive shall be reimbursed for his reasonable travel expenses to commute
between his St. Louis residence and the Development Company's headquarters and
for his reasonable living expenses for temporary accommodation in the area of
such headquarters. The Executive shall also be reimbursed for his reasonable
actual moving expenses in connection with his relocation from St. Louis to the
area of the Development Company's headquarters. For certainty, the Executive
shall not be entitled to any reimbursement or compensation for any loss suffered
as a result of any diminution in the value of his residence in St. Louis or any
costs incurred in connection with the sale of such residence.
4.12 Deductions and Withholdings. The Company and the Development Company
shall be entitled to make such deductions and withholdings from the Executive's
remuneration as may be required by law and as may be required by the Executive's
participation in or receipt of any benefit,
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stock option or other program contemplated hereby, and the obligations of the
Company and the Development Company in respect thereof shall thereby be
satisfied to the extent of such deductions and withholdings.
5. TERMINATION
5.1 Cause. The Company's CEO or the Board may terminate the employment of
the Executive at any time for Cause by giving written notice of termination to
the Executive at least three days prior to the effective date of termination,
which notice shall specify in reasonable detail the basis for the determination
of Cause.
5.2 Disability. The Company may terminate the employment of the Executive at
any time if the Executive suffers a Disability by giving written notice of
termination to the Executive at least 60 days before the effective date of
termination, which date shall be the last day of a calendar month during the
continuance of such Disability. The Executive shall cooperate in all respects
with the Company if a question arises as to whether he has become disabled.
Without limiting the generality of the foregoing, the Executive shall authorize
his medical doctor or other health care specialist to discuss the condition of
the Executive with the Company and shall submit to examination by a medical
doctor or other health care specialist selected by the Company.
5.3 Death. The Executive's employment hereunder shall terminate
automatically upon his death.
5.4 Reasonable Notice. From and after the fourth anniversary of the
Effective Date, the Company's CEO or the Board may terminate the Executive's
employment by giving written notice of termination to the Executive at least one
year prior to the effective date of termination.
5.5 Dismissal without Cause. The Company's CEO or the Board may terminate
the Executive's employment other than as provided in the foregoing provisions of
this Section 5 at any time by giving written notice of termination to the
Executive.
5.6 Good Reason. The Executive may terminate his employment here under at
any time for Good Reason by giving written notice of termination to the Company
at least 30 days prior to the effective date of termination. Where the Executive
gives notice to the Company of any breach of this Agreement or other occurrence
that, if not remedied, would constitute Good Reason and such breach or
occurrence is not remedied within 30 days thereafter, the Executive's right to
terminate pursuant to this Section shall be deemed to have been waived if not
exercised within a further period of 30 days.
5.7 Voluntary Resignation. From and after the fourth anniversary of the
Effective Date, the Executive may terminate his employment without Good Reason
by giving written notice to the Company at least one year prior to the effective
date of termination.
12
5.8 Expiry. The Executive's employment hereunder shall terminate
automatically upon the expiry of his term of employment, as the same may be
extended from time to time pursuant to Section 2.2.
5.9 Termination Entitlement. Upon any termination of the Executive's
employment hereunder:
(a) Severance. Subject as provided in Sections 5.9(b),(c),(d) and
(e):
(i) if the Executive's employment is terminated by the
Company without Cause pursuant to Section 5.5 or by the
Executive for Good Reason, the Executive shall be
entitled to receive any accrued and unpaid base salary
and vacation pay and any unpaid reimbursements up to the
Date of Termination and, as liquidated damages, the base
salary otherwise payable to him until the later of (A)
the expiry of the Initial Term and (B) the first
anniversary of the Date of Termination; and
(ii) if the Executive's employment is terminated other than
in either of the circumstances referred to in clause (i)
above, the Executive (or his estate, as the case may be)
shall not be entitled to any severance, payment in lieu
of notice of termination or similar payment in respect
of such termination other than any accrued and unpaid
base salary and vacation pay and any unpaid
reimbursements up to the Date of Termination;
(b) Options. The following provisions shall apply in respect of all
Options held by the Executive as of the Date of Termination:
(i) if the Executive's employment is terminated for Cause,
any Trizec Options held by the Executive and exercisable
immediately prior to the Date of Termination shall
continue to be exercisable for a period of 30 days (but
no more) after the Date of Termination and all other
Options held by the Executive shall terminate as of the
Date of Termination;
(ii) if the Executive's employment is terminated by reason of
his Disability or death, the Executive (or his estate,
as the case may be) shall be entitled to exercise all
Options held by the Executive, whether or not vested, at
any time within one year following the Date of
Termination;
(iii) if the Executive terminates his employment for Good
Reason or the Company terminates his employment without
Cause pursuant to Section 5.5, all Options held by the
Executive shall vest, shall be exercisable immediately
13
and shall remain in force until their original
expiration dates and, in the event that all the Options
required to be granted under Section 4.4 following the
second, third, fourth and fifth anniversaries of the
Effective Date have not been granted, the Company shall
make a payment to the Executive in respect of any such
ungranted Options on the date or dates upon which such
Options would have been required to be granted in an
amount equal to the value of such ungranted Options as
determined under the so-called "Black-Scholes" pricing
rule (or any other then generally recognized formula for
valuing stock options) by a major investment banking
firm in the United States or Canada selected by the
Board which is not then regularly engaged on behalf of
the Company; and
(iv) if the Executive's employment is terminated other than
in any of the circumstances referred to in clauses (i),
(ii) and (iii) above, (A) the Executive shall have a
period of 30 days following the Date of Termination in
which to exercise any vested Options held by him at the
Date of Termination and any such Options that remain
unexercised at the end of such 30-day period shall
terminate unless extended by the Board, in its absolute
discretion, in accordance with the terms of the Plan and
(B) any unvested Options held by the Executive at the
Date of Termination shall terminate unless the Board
otherwise determines, in its absolute discretion, in
accordance with the terms of the Plan;
(c) Loan Forgiveness. The outstanding principal amount of the Loan
shall be forgiven unless the Executive's employment has been
terminated by the Executive without Good Reason, in which case
the outstanding principal amount of the Loan shall become
payable on demand, without interest, and the Company shall have
the right, on behalf of itself and its Subsidiaries, to set off
the outstanding principal amount of the Loan, in whole or in
part, against any amount payable from time to time by the
Company or any of its Subsidiaries to the Executive;
(d) Benefits: Continuation of Medical Coverage. Any benefits to
which the Executive or his beneficiaries may be entitled under
the various benefit plans and programs in which he participates
by reason of his employment hereunder shall be determined as of
the Date of Termination in accordance with the terms of such
plans and programs; provided that:
(i) if the Executive's employment is terminated by the
Executive for Good Reason or by the Company without
Cause pursuant to Section 5.5, to the extent permitted
under the terms of such plans and programs, the
Executive shall be entitled to continue to participate
in the group medical, dental and
14
hospitalization plans and programs until the later of
(A) the expiry of the Initial Term and (B) the first
anniversary of the Date of Termination; and
(ii) without in any way limiting clause (i) of this Section
5.9(d), regardless of the circumstance in which the
Executive's shall be employment is terminated, to the
extent permitted under the terms of such plans and
programs, the Executive entitled to continue to
participate in the group medical, dental and
hospitalization plans and programs at his own cost,
without any contribution or reimbursement by the Company
or the Development Company, until the Executive obtains
alternative employment or until the expiry of five years
following the Date of Termination, whichever occurs
first; and
(e) Incentive Awards. The Executive shall not be entitled to any
Incentive Award in respect of any Incentive Project unless the
Return Test has been satisfied on or before the Date of
Termination; provided, however, that (i) if the Executive's
employment is terminated (A) by the Executive's death or
Disability, (B) by the Company by giving notice pursuant to
Section 5.4 or without Cause pursuant to Section 5.5, (C) by the
Executive for Good Reason or by giving notice pursuant to
Section 5.7 or (D) by the expiry of the Executive's term of
employment pursuant to Section 5.8, the Executive shall be
entitled to (x) an Incentive Award in respect of each Incentive
Project then under construction or in operation and for which
the Return Test has not been satisfied on or before the Date of
Termination to be paid, if at all, in the amount and manner and
at the time specified in Section 4.5 and (y) an incentive award
in respect of each Incentive Project for which construction has
not commenced in such amount, at such time and subject to such
conditions as the Company's CEO and the Executive (or his
estate, as the case may be) may mutually agree recognizes the
Executive's contribution to the Incentive Project on a basis
that is fair to both the Executive and the Development Company
and (ii) if the Executive's employment is terminated by the
Company for Cause solely as a result of the Executive's
conviction in a court of law or entering of a plea of guilty or
no contest to any felony and the Executive establishes to the
satisfaction of the Company's CEO that such felony could not
reasonably be expected to adversely affect TrizecHahn
(including, without limitation, its business reputation), the
Executive shall be entitled to an incentive award in respect of
each Incentive Project for which the Return Test has not been
satisfied on or before the Date of Termination in such amount,
at such time and subject to such conditions as the Company's CEO
and the Executive may mutually agree recognizes the Executive's
contribution to the Incentive Project on a basis that is fair to
both the Executive and the Development Company.
5.10 Full Satisfaction: Resignations and Releases. Other than as provided in
the foregoing provisions of this Section 5, the Executive (and his estate, if
applicable) shall have no claim whatsoever against the Company, the Development
Company, TrizecHahn or any other Person
15
for damages, remuneration or otherwise arising out of or relating to any
termination of his employment hereunder. The Executive specifically agrees to
execute a formal release document to that effect and shall deliver appropriate
resignations from all offices and positions with the Development Company, the
Company or any other Subsidiary of the Company if and when requested by the
Board or the Company's CEO following any termination of his employment.
5.11 Statutory Entitlements. The amounts payable to the Executive pursuant to
this Section 5 upon the termination of his employment shall be reduced by the
amount of any payments which the Company or the Development Company is obligated
to make to the Executive by reason of such termination pursuant to applicable
employment standards legislation.
6. LOAN
6.1 Making of Loan. Upon the execution of this Agreement, the Company shall
make or cause to be made an interest-free loan to the Executive in the amount of
$2,600,000. The Loan shall be payable by the Executive only in the event and to
the extent provided in Section 5.9(c) of this Agreement.
6.2 Forgiveness. The Company hereby agrees to forgive one-third of the
original amount of the Loan, until the Loan is forgiven in full, at the Opening
of each Incentive Project, regardless of whether the Return Test is satisfied in
respect of such Incentive Project. Any such loan forgiveness shall be in
addition to any Incentive Award which may be payable in respect of such
Incentive Project.
7. EXECUTIVE'S COVENANTS
7.1 Acknowledgement. The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities
hereunder, he will have access to and will be entrusted with
detailed confidential or proprietary information concerning the
Development Company and TrizecHahn, the disclosure of any of
which to competitors of TrizecHahn or to the general public, or
the use of same by the Executive or any competitor of
TrizecHahn, would be highly detrimental to the interests of the
Development Company and TrizecHahn;
(b) in the course of performing his duties and responsibilities
hereunder, the Executive will be a representative of the
Development Company and TrizecHahn to third parties and as such
will have significant responsibility for maintaining and
enhancing the goodwill of the Development Company and TrizecHahn
with such parties;
(c) the Executive, as an officer of the Development Company and a
senior executive of TrizecHahn, owes fiduciary duties to the
Development Company, the Company and
16
TrizecHahn, including to act in the best interests of the
Development Company, the Company and TrizecHahn; and
(d) the right to maintain the confidentiality of such confidential
and proprietary information, the right to preserve the goodwill
of the Development Company and TrizecHahn and the right to the
benefit of any relationships with third parties that have
developed by virtue of the Executive's employment hereunder
constitute proprietary rights of TrizecHahn which TrizecHahn is
entitled to protect.
In acknowledgement of the matters described above and in
consideration of the payments and other benefits to be received by the Executive
pursuant to this Agreement, the Executive hereby agrees to comply with the
covenants and restrictions set out in this Section 7.
7.2 Confidential Information. The Executive shall maintain the
confidentiality of all confidential and proprietary information concerning the
Development Company or TrizecHahn for a period of three years (or one year if
the Executive's employment is terminated by the Company without Cause pursuant
to Section 5.5 or by the Executive for Good Reason) following the Date of
Termination or, if earlier, until the date, if any, on which (i) the relevant
information becomes available to the public or is made available to the
Executive from a source which is not bound by an obligation of confidentiality
to the Development Company or TrizecHahn or (ii) the Executive is required to
disclose such information by any court or governmental or regulatory authority
of competent jurisdiction (in which case the Executive shall be entitled to
disclose or make use of such information only to the extent he is so required).
7.3 Restriction on Solicitations. The Executive shall not, without the
specific prior written consent of the Board or the Company's CEO, during the
term of this Agreement and for a period of two years after the Date of
Termination, either on his own behalf or on behalf of any other Person, solicit
the services of or entice away any Person employed by or otherwise providing
services to TrizecHahn on a full-time or part-time basis or solicit any
customers, clients or suppliers of the Development Company or TrizecHahn to
transfer any business from the Development Company or TrizecHahn to any other
Person.
7.4 Restriction on Competition. For so long as he remains employed hereunder
and for a period of one year following the Date of Termination, the Executive
shall not, either individually or in partnership or jointly or in conjunction
with any other Person, as principal, agent, shareholder or in any other capacity
whatsoever, carry on or be engaged in or concerned with or have any ownership or
other interest in, or advise, lend money to, guarantee the debts or obligations
of, or permit his name or any part thereof to be used or employed by or
associated with, any business or activities that are competitive with the real
estate development activities of TrizecHahn in the United States or Canada;
provided that (i) this Section 7.4 shall not apply in connection with any of the
activities permitted under Section 3.4 or in connection with any private
investment vehicle formed and controlled by the Executive after the Date of
Termination and (ii) if the Executive is in default
17
of his obligations under this Section, the one-year period referred to above in
this Section shall be extended by one day for every day that such default
continues.
7.5 Return of Materials. All files, forms, brochures, books, materials,
written correspondence, memoranda, documents, manuals, computer disks, software
products and other data (including financial and other information) pertaining
to the Development Company or TrizecHahn which may come into the possession or
control of the Executive shall at all times remain the property of TrizecHahn.
Upon termination of the Executive's employment hereunder for any reason, the
Executive agrees to immediately deliver to the Company all such property of
TrizecHahn in the possession of the Executive or directly or indirectly under
the control of the Executive. The Executive agrees not to make, for his personal
or business use or that of any other party, reproductions or copies of any such
property or other property of TrizecHahn.
8. GENERAL
8.1 Notices. Any notice or other communication to be given in connection
with this Agreement shall be in writing and may be given by personal delivery,
facsimile or registered mail addressed to the recipient as follows:
(a) if to the Executive:
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to the new headquarters of the Development Company if such
headquarters cease to be at me address specified above; and
(b) if to the Company:
Trizec ▇▇▇▇ Corporation
BCE Place
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Chief Executive Officer
or such other address as may be designated by notice by either party to the
other. Any notice or other communication given by personal delivery or facsimile
shall be conclusively deemed to have been given on the day of actual delivery or
transmission thereof and, if made or given by registered mail,
18
on the fifth day, excluding Saturdays, Sundays and statutory holidays in Ontario
or California, following the deposit thereof in the mail. If the party giving
any notice or other communication knows or ought reasonably to know of any
difficulties with the postal system in Canada or the United States which might
affect the delivery of mail, any such notice or other communication shall not be
mailed but shall be given by personal delivery or facsimile.
8.2 Amendment and Waiver. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
the party to be bound thereby, except as otherwise provided in Section 5.6. A
waiver of any provision of this Agreement by either party shall not be construed
as a waiver of a subsequent breach or failure of the same provision, or a waiver
of any other provision.
8.3 Benefit of Agreement. This Agreement shall inure to the benefit of and
be binding upon the heirs, executors, administrators and legal personal
representatives of the Executive and the successors and assigns of the Company.
This Agreement is personal to the Executive and may not be assigned by him.
8.4 Governing Law. This Agreement shall be interpreted in accordance with
and governed by the laws of the State of New York and each party unconditionally
and irrevocably submits to the non-exclusive jurisdiction of the courts of such
state and of the courts of the Province of Ontario. [A line is drawn through the
words "and of the courts of the Province of Ontario." and the initials GW and
LHW are written below those words.]
8.5 Acknowledgement. The Executive acknowledges that:
(a) the Executive has had sufficient time to review and consider
this Agreement thoroughly;
(b) the Executive has read and understands the terms of this
Agreement and the Executive's obligations hereunder;
(c) the Executive has obtained independent legal advice concerning
the interpretation and effect of this Agreement; and
19
(d) this Agreement is entered into voluntarily and without any
pressure.
IN WITNESS WHEREOF the parties have executed this Agreement the
_____ day of December, 1997.
TRIZEC ▇▇▇▇ CORPORATION
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
)
)
) /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------- ) -----------------------------
Witness ) ▇▇▇ ▇. ▇▇▇▇▇▇
20
SCHEDULE A
TRIZECHAHN DEVELOPMENT GROUP MANDATE
See attached.
Discussion Draft: October 12 1997
---------------------------------
TRIZECHAHN DEVELOPMENT GROUP - MANDATE
The following outlines the principal elements of a suggested mandate for the
newly-formed TrizecHahn development group. Although the optimal legal and
financial structure for the new development group has yet to be settled, for
ease of reference, the group will be referred to as "TDC" (i.e., "TrizecHahn
Development Corporation"). The purpose of the outline is to clarify the
anticipated role of TDC to a degree sufficient to support recommendations in
other key areas, such as TDC's staffing requirements, legal and tax structure,
management processes, budgeting and cost allocation policies and business plan
generally.
It seems clear that a number of TDC's functions will be international in scope.
However, there appear to be noteworthy differences anticipated, at least
initially, as between TDC's role in: (1) North America; (2) Asia and South
America; and (3) Europe. As a result, for purposes of this preliminary outline,
TDC's mandate for each of those three geographic regions has been described
separately. In addition, the discussion of the mandate in each region is
organized to address the five key requirements of the development process: (1)
the formulation of strategy; (2) the identification of development
opportunities; (3) the evaluation of opportunities; (4) the execution of
approved projects; and (5) the transition from the development of a project to
actual operations.
In view of the expertise in the office segment which resides in TrizecHahn
Office Properties ("TH Office"), throughout this outline, the approach to be
taken to office-only projects and mixed-use projects in which the office
component is likely to be dominant (collectively referred to as "office
projects") is discussed separately.
SUMMARY
In its most basic form, TDC's mandate is to identify, evaluate, recommend and,
following approval, execute as quickly as possible the maximum number of
development projects which meet TrizecHahn's return, strategic and other
criteria. Pending the formulation of more specific domestic and international
development strategies, the relevant projects may include (either directly or
through partners) retail-entertainment, office, residential, hotel, industrial
and mixed-use development.
In North America, TDC will be responsible for identifying, evaluating,
recommending and executing all development opportunities, other than office
projects. TrizecHahn's development strategy in North America will be set by the
Chairman of TrizecHahn Corporation ("TZH"), the President of TZH and the
President of TDC, acting in consultation with an informal "Steering Committee"
involving other members of senior management. The officers who are expected to
participate in the Committee's activities include the Managing Director,
International of TZH, the President of TH Office, the Chief Operating
Officer of TDC, the Chief Financial Officer of TZH and other members of senior
management as circumstances warrant.
With respect to office projects in North America, responsibility for the
identification and evaluation of opportunities will fall to TH Office in
accordance with a program to be developed by TH Office in consultation with TDC.
North American office projects which move to the execution stage will be handled
by appropriately-qualified project managers (either to be hired or one of the
two currently employed by TH Office and TZH). Other than the Bay-Adelaide and
Banker's Hall projects, it is proposed that the actual execution of all North
American office development projects will be managed by TDC. However, this is a
matter which is deserving of further discussion (including in relation to the
role, if any, to be played by the JBG development group in support of
TrizecHahn's office development program).
With respect to development projects in Asia and South America, strategy will be
set by the Chairman of TZH, the President of TZH and the President of TDC,
acting in consultation with the Steering Committee and, for Asia, the Managing
Director of TrizecHahn Asia Pacific ("TH Asia Pacific"). The identification of
development opportunities in Asia will be the responsibility of TH Asia Pacific.
The evaluation of those opportunities will be a cooperative effort between TH
Asia Pacific and TDC (and, where appropriate, staff drawn from TH Office). For
Asian projects which move to the execution phase, TDC will become directly
responsible.
Through the Steering Committee, TDC will participation decisions regarding the
organization and implementation of TrizecHahn's South American program. The
extent to which TDC will be called upon to participate in or take responsibility
for the identification, evaluation or execution of development opportunities in
South America will be determined in response to the circumstances encountered as
the investigative process in South America proceeds. Among the factors which
will affect TDC's role in South America is the extent to which TrizecHahn is
successful in either acquiring or establishing close relationships with South
American companies with independent development capabilities.
With respect to development opportunities in Europe, TDC's role is expected to
be limited to consultation to the extent requested by TrizecHahn Europe or by
the Chairman or President of TZH.
2
SCHEDULE B
EXISTING INCENTIVE PROJECTS
Projected Return
------------------------------------------------
Levered Project
Return Levered Project
Development Project for Third Year Return IRR
------------------------------ ------------------------ --------------------
Valley Fair Mall - Expansion 12.7% 35.2%
San Jose, California
Fashion Outlet of Las Vegas 19.8% 23.9%
Las Vegas, Nevada
TrizecHahn Corporation Letterhead ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
and Chief Operating Officer
Tel ▇▇▇ ▇▇▇ ▇▇▇▇
Fax ▇▇▇ ▇▇▇ ▇▇▇▇
September 29, 2000
▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Dear ▇▇▇:
Further to our recent discussions on your compensation package, I would like to
confirm the following amendments to the applicable sections of your Employment
Agreement.
1. Annual Base Salary/Cost of Living Allowance (COLA)
While your current annual base salary of $672,000 will remain unchanged, other
than future merit and/or CPI adjustments, you will receive a supplemental Cost
of Living Allowance (COLA) in the annualized amount of $228,000. Please note,
this special supplement to your base compensation will not be factored into the
calculation of incentive bonus awards or salary-driven employment
benefit/insurance entitlements, however it will be subject to an appropriate
annual CPI adjustment. The effective date of the supplemental COLA will be
retroactive to July 1, 2000.
An Annual Bonus for the year 2000 will be paid on January 3, 2001 in an amount
equal to 50% of the total Annual Base Salary paid to you during the year 2000.
2. Relocation Award
A one-time award of $800,000 is to be granted by way of forgiveness of that
portion of the loan provided by TrizecHahn Corporation to you to assist with the
purchase of your home in Los Angeles. As consideration for the extra costs of
your move, an additional $400,000 has been drawn under that loan as of September
21, 2000.
The partial loan forgiveness referred to above will become effective upon the
sale of your St. Louis residence in the event of such loss.
BCE Place, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇ - Amendment to Employment Agreement
3. Incentive Award for Desert Passage/Year 2000 Bonus
As recognition of the success of Desert Passage, the Incentive Award for this
project will be earned and, as I previously indicated to you, paid by November
30, 2000.
The Award is $1,293,600, which reflects the contractually agreed award of
$1,200,000 adjusted per the original agreement by the CPI increase of 7.8% from
July 1997 to July 2000.
An additional Incentive Award of $500,000 will be paid for the Desert Passage
project upon closing of the sale of all or a majority interest in this asset.
4. Future Incentive Awards
The Incentive Award for the Hollywood & Highland project will be paid when and
if the return on cost is reasonably anticipated to achieve 12%, which is the
return originally approved by the Development Committee. A supplemental award
doubling this project's Incentive Award will be paid when and if the return on
cost on this project is reasonably anticipated to achieve 13.5 %.
The Hollywood Hotel project is acknowledged to be a separate Incentive Project,
and an Incentive Award will be paid for it when the return on equity is
reasonably anticipated to achieve 11.3%, which is the return originally approved
by the Development Committee. A supplemental award doubling this project's
Incentive Award will be paid when and if the internal rate of return (IRR) on
this project is reasonably anticipated to achieve 17%.
The Incentive Award for the Paseo Colorado project will be paid when and if the
return on cost is reasonably anticipated to achieve 10.9%, which is the return
originally approved by the Development Committee, or at an earlier date upon
closing of a sale of this project so long as if a reasonable portion of the
project's anticipated development profit is achieve thereby.
5. Term
The term of Employment Agreement will be extended by one year to August 15,
2003, in order to help realize the full value of our investments.
Yours truly,
TrizecHahn Corporation
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and
Chief Operating Officer
▇▇▇ ▇▇▇▇▇▇ - Amendment to Employment Agreement
2