Exhibit 10.3
EXECUTIVE SUPPLEMENTAL EMPLOYMENT
AGREEMENT
AGREEMENT by and between HIGHWOODS
PROPERTIES, INC., a Maryland corporation (the
“Company”), and Terry L. Stevens (the
“Executive”), dated as of April 13,
2007.
The Board of Directors of the
Company (the “Board”), has determined that it is in the
best interests of the Company and its stockholders to ensure that
the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined in Section 1) of the Company. The Board
believes it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to
encourage the Executive’s full attention and dedication to
the Company currently and in the event of any threatened or pending
Change of Control, and to provide the Executive with compensation
and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
SECTION 1. Certain
Definitions .
(a) The “Effective Date”
shall mean the first date during the Change of Control Period (as
defined in Section 1(b)) on which a Change of Control occurs.
Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive’s employment
with the Company is terminated prior to the date on which the
Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (i) was at
the request of a third party who has taken steps reasonably
calculated to effect the Change of Control or (ii) otherwise
arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the “Effective
Date” shall mean the date immediately prior to the date of
such termination of employment.
(b) The “Change of Control
Period” shall mean the period commencing on the date hereof
and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and
each annual anniversary thereof shall be hereinafter referred to as
the “Renewal Date”), the Change of Control Period shall
be automatically extended so as to terminate three years from such
Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of
Control Period shall not be so extended.
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(c) For purposes of this Agreement,
a “Change of Control” shall mean:
(i) The acquisition by any
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (a) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or
(b) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that the following
acquisitions shall not constitute a Change of Control: (I) any
acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (II) any
acquisition by the Company, (III) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (IV) any
acquisition by any corporation pursuant to a reorganization, merger
or consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (I), (II) and
(III) of subsection (i) of this Section 1(c) are
satisfied; or
(ii) Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(iii) Approval by the stockholders
of the Company of a reorganization, merger or consolidation, in
each case, unless, following such reorganization, merger or
consolidation, (a) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially
the same proportions, as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (b) no Person (excluding the Company, any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such reorganization, merger or consolidation and any
Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly,
20% or more of the Outstanding Company Common Stock or Outstanding
Voting Securities, as the case may be) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
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outstanding shares of common stock
of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors and (c) at least a majority of the
members of the board of directors of the corporation resulting from
such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the stockholders of
the Company of (a) a complete liquidation or dissolution of
the Company or (b) the sale or other disposition of all or
substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other
disposition, (I) more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately
prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (II) no
Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities, as
the case may be) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (III) at least a
majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing
for such sale or other disposition of assets of the
Company.
SECTION 2. Employment Period
. The term of this Agreement shall commence on the Effective Date
and end on the third anniversary of such date (the
“Employment Period”), subject to the termination
provisions in Sections 4 and 5 herein.
SECTION 3. Terms of
Employment .
(a) Position and Duties
.
(i) During the Employment Period,
(A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 90-day period immediately preceding
the Effective Date and (B) the Executive’s services
shall be performed at the location where the Executive was employed
immediately preceding the Effective Date or any office which is the
headquarters of the Company and is less than 35 miles from such
location.
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(ii) During the Employment Period,
and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment
Period, it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective
Date shall not hereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
(b) Compensation.
(i) Base Salary . During the
Employment Period, the Executive shall receive an annual base
salary (“Annual Base Salary”), which shall be paid in
equal installments on a monthly basis, at least equal to twelve
times the highest monthly base salary paid or payable to the
Executive by the Company and its affiliated companies in respect of
the twelve-month period immediately preceding the month in which
the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally
awarded in the ordinary course of business to other peer executives
of the Company and its affiliated companies. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation
to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary
as utilized in this Agreement shall refer to Annual Base Salary as
so increased. As used in this Agreement, the term “affiliated
companies” shall include any company controlled by,
controlling or under common control with the Company.
(ii) Annual Bonus . In
addition to Annual Base Salary, the Executive shall be awarded, for
each fiscal year ending during the Employment Period, an annual
bonus (the “Annual Bonus”) in cash at least equal to
the average bonus paid or payable, including by reason of any
deferral, to the Executive (or, if the Executive has been employed
by the Company for less than three full fiscal years, then the
average bonus paid or payable to the executive officer who was
employed by the Company in a similar capacity as the Executive
during such three full fiscal years) by the Company and its
affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the Effective Date
occurs (the “Recent Average Bonus”). Without
limitation, for purposes of this Agreement,
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the terms
“Annual Bonus” and “Recent Average Bonus”
shall be deemed to include amounts earned (whether or not paid)
with respect to any applicable period under any Non-Equity
Incentive Plan (as such term is defined in Item 402(a)(6)(iii)
of Regulation S-K promulgated under the Exchange Act and the
Securities Act of 1933, as amended, including any successor
thereto). Each such Annual Bonus shall be paid within 2
1
/
2 months following
the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect, pursuant to a plan of nonqualified deferred
compensation adopted by the Company, if any, under which the Annual
Bonus may be deferred, to defer the receipt of such Annual
Bonus.
(iii) Special Bonus . In
addition to Annual Base Salary and Annual Bonus payable as
hereinabove provided, if the Executive remains employed with the
Company and its affiliated companies through the first anniversary
of the Effective Date, the Company shall pay to the Executive a
special bonus (the “Special Bonus”) in recognition of
the Executive’s services during the crucial one-year
transition period following the Change of Control in cash equal to
the sum of (A) the Executive’s Annual Base Salary and
(B) the greater of (1) the Annual Bonus paid or payable,
including by reason of any deferral, to the Executive (or, if the
Executive has been employed by the Company for less than three full
fiscal years, then the average bonus paid or payable to the
executive officer who was employed by the Company in a similar
capacity as the Executive during such three full fiscal years) for
the most recently completed fiscal year during the Employment
Period, if any, and (2) the Recent Average Bonus (such greater
amount shall be hereinafter referred to as the “Highest
Annual Bonus”). The Special Bonus shall be paid no later than
30 days following the first anniversary of the Effective
Date.
(iv) Incentive, Savings and
Retirement Plans . During the Employment Period, the Executive
shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company
and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date or if
more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(v) Welfare Benefit Plans .
During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with
benefits
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which are less favorable, in the
aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(vi) Expenses . During the
Employment Period, the Executive shall be entitled to receive
prompt reimbursement for all reasonable employment expenses
incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date, or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vii) Fringe Benefits .
During the Employment Period, the Executive shall be entitled to
fringe benefits no less favorable, in the aggregate, than the
plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date, or if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(viii) Office and Support
Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and
other appointments, and to exclusive personal secretarial and other
assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated
companies at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(ix) Vacation . During the
Employment Period, the Executive shall be entitled to paid vacation
in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
SECTION 4. Termination of
Employment .
(a) Death or Disability . The
Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Period. If the
Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 10(b) of
its intention to terminate the Executive’s employment. In
such event, the Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the
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“Disability Effective Date”),
provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the Executive is, by reason of
any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under
an accident and health plan covering employees of the
Company.
(b) Cause . The Company may
terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement,
“Cause” occurs when the Executive does any of the
following:
(i) is convicted of a felony
involving moral turpitude under federal, state or local
law;
(ii) materially breaches the
Executive’s obligations under Section 3(a) (other than
as a result of incapacity due to physical or mental illness) that
is demonstrably willful and deliberate on the Executive’s
part, that is committed in bad faith or without reasonable belief
that such breach is in the best interests of the Company and that
is not remedied in a reasonable period of time after receipt of
written notice from the Company specifying such breach);
and/or
(iii) is convicted of any applicable
local, state or federal law or Company policy related to
discrimination or harassment.
(c) Good Reason; Window
Period . The Executive’s employment may be terminated
(i) during the Employment Period by the Executive for Good
Reason or (ii) during the Window Period by the Executive
without any reason. For purposes of this Agreement, the
“Window Period” shall mean the 90-day period
immediately following the first anniversary of th
