This Release Agreement involves
Title: SEPARATION AGREEMENT AND RELEASE
Industry: Real Estate Operations Sector: Services
SEPARATION AGREEMENT AND RELEASE
This Separation Agreement and Release (“Agreement”) is made and entered into this 20th day of December, 2010, by and between JOAN U. ALLGOOD, your heirs, executors, successors and administrators (“YOU” or “YOUR” or “YOURSELF”) and DEVELOPERS DIVERSIFIED REALTY CORPORATION, its predecessors, current and former subsidiaries, divisions, related entities and affiliates and all of their current and former Boards, owners, officers, trustees, directors, members, shareholders, agents, representatives, employees, employee benefit plans, insurers, attorneys and their successors and assigns(collectively referred to hereafter as “DDR”). (YOU and DDR are each sometimes referred to herein as a “Party” or the “Parties”).
DDR and YOU have agreed that YOUR employment with DDR will terminate on the Separation Date (as defined below). Pursuant to the terms of the Amended and Restated Employment Agreement, dated as of December 29, 2008, between YOU and DDR (the “Employment Agreement”), the termination of YOUR employment with DDR will be designated a termination without cause (in accordance with Section 5(a)(iii) of the Employment Agreement) and YOU acknowledge that DDR has provided YOU with ninety-days’ notice or YOU have hereby waived any applicable ninety-days’ notice requirement under the Employment Agreement. YOU will be deemed to have resigned from all offices and directorships with DDR as of the Separation Date, except that, upon DDR’s request and YOUR agreement, YOU may serve after the Separation Date as a Responsible Manager of EDT Australian Services Pty. Limited for such period of time as may be requested by DDR.
Under the terms of this Agreement, DDR and YOU further agree as follows:
1. Separation . YOUR employment with DDR will terminate on January 31, 2011 (the “Separation Date”). YOUR final day of employment is the Separation Date, and any benefits provided to YOU pursuant to YOUR employment with DDR shall cease as of the Separation Date unless otherwise specifically provided at law or under this Agreement, or under any other DDR agreement that provides for benefits to be provided to YOU following termination of YOUR employment.
2. Terms .
A. As consideration for this Agreement, YOU shall receive severance pay in the total gross amount of $1,800,000, assuming the Revocation Period (as defined in Section 16) has lapsed without YOU revoking this Agreement. Of this amount, $1,251,000 shall be paid in a single lump-sum cash payment, less applicable withholding, within three (3) business days following the expiration of the Revocation Period. The remaining $549,000 shall be paid in a single lump-sum cash payment, less applicable withholding, on the first business day of the seventh month after the Separation Date, provided that if YOU die before such date, such amount shall be paid as soon as administratively possible to your estate.
B. YOU shall be entitled to receive a payment of $122,000, which represents YOUR bonus compensation actually earned by YOU for the 2010 fiscal year in a lump sum payment, less all applicable deductions, on the same date as it would have been paid if the Separation Date had not occurred, but in any event not later than March 15, 2011.
C. The Separation Date shall be considered a “qualifying event” for purposes of triggering YOUR right to continue YOUR group health and dental benefits pursuant to federal law (commonly referred to as “COBRA”). As such, YOUR enrollment in DDR’s group health insurance will cease as of January 31, 2011. If YOU properly make your election and timely provide a copy of YOUR election form to DDR, DDR shall pay for YOUR COBRA benefits for YOU and YOUR eligible dependents from February 1, 2011 through the earlier of (i) July 31, 2012, or (ii) the day YOU become eligible for substantially equivalent health insurance benefits through another employer.
Notwithstanding the immediately preceding paragraph, DDR shall consider, but not be obligated, to amend its group health insurance plan before August 1, 2012 in a manner to provide coverage for certain former DDR employees for a period of time beyond July 31, 2012(“Former Employee Coverage”). If DDR elects to make such an amendment to its group health insurance plan, then DDR shall include YOU and your spouse as a member of this class being offered Former Employee Coverage, which you may elect at YOUR option until the earlier of (i) YOU are employed by another employer, or (ii) such coverage terminates per its terms. However, DDR makes no representation as to scope or terms of such coverage, if any, including but not limited to terms, conditions and exclusions, period of coverage, cost, etc. YOU acknowledge that any such coverage will be at YOUR sole cost and expense from and after January 31, 2013 and will be available only until YOU are employed by another employer.
If as of August 1, 2012, YOU do not have Former Employee Coverage and YOU have not become eligible for substantially equivalent health insurance benefits from another employer, DDR will provide YOU with a monthly cash payment equal to the monthly amount being contributed by DDR as of July 31, 2012 for the continuation of benefits for YOU and YOUR spouse under COBRA through the earlier of (i) January 31, 2013; or (ii) the first day of the month on which YOU become eligible for substantially equivalent health insurance benefits through another employer.
The reimbursements of health and dental expenses under this Section shall be subject to the provisions that: (i) any reimbursement of eligible health and/or dental expenses under DDR health and dental benefits coverages will be paid within 30 days following YOUR written request for such reimbursement, provided that YOU provide such written notice no later than 60 days before the last day of the calendar year following the calendar year in which said expenses were incurred so that DDR can make the reimbursement within the time periods required by Section 409A of the Internal Revenue Code of 1986, as amended; (ii) the amount of health and/or dental expenses eligible for reimbursement during any calendar year will not affect the amount of health and/or dental expenses eligible for reimbursement during any other calendar year; and (iii) the right to reimbursement will not be subject to liquidation or exchange for any other benefit. The health and dental benefits coverage that YOU and YOUR family will receive through July 31, 2012 will be the same coverage YOU would have received if you had remained as an active employee on or after the Separation Date and will be
provided under the same terms as those applicable to DDR’s active employees, and thereafter, such coverage will bet as set forth in this Agreement.
D. The Separation Date shall not be extended as a result of any short- or long-term disability, and YOU shall not be eligible for any disability benefits after the Separation Date.
E. YOU will receive payment for any accrued but unused Paid Time Off (PTO) days for calendar year 2011 through the Separation Date as soon as administratively possible following the Separation Date, but in no event more than 30 days following the Separation Date.
F. YOU shall have available to you 12 months of outplacement services (or similar services, e.g. board placement services), which shall be paid directly by DDR to an executive outplacement firm agreed to by both parties. In order to participate in this benefit, you must engage the selected outplacement firm within thirty  days following the Separation Date. These services will not be subject to liquidation or exchange for any other benefit.
G. DDR will pay the reasonable fees and expenses of counsel, accountants, or consultants engaged by YOU in an amount not to exceed $15,000 to review this Agreement and/or to provide advice to YOU in connection with the execution of and receipt by YOU of payments under this Agreement; provided , however , that: (i) any reimbursement of eligible expenses will be paid within 30 days following YOUR written request for such reimbursement, provided that YOU provide such written notice no later than 60 days before the last day of the calendar year following the calendar year in which said expenses were
incurred so that DDR can make the reimbursement within the time periods required by Section 409A of the Internal Revenue Code of 1986, as amended; (ii) the amount of expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement during any other calendar year; and (iii) the right to reimbursement will not be subject to liquidation or exchange for any other benefit.
H. YOU acknowledge the sufficiency of the consideration described above for YOUR promises set forth herein including without limitation the Release detailed in Section 5 of this Agreement. You further acknowledge that the payments, benefits and services described in this Section 2 include (i) all amounts to which YOU would be entitled under the Employment Agreement, subject to YOUR execution and non-revocation of this Agreement, and (ii) additional payments, benefits or services substantially in excess of the amounts to which YOU would be entitled under the Employment Agreement.
3. Benefit Plans. YOU understand and agree that the applicable provisions of DDR benefit plans to which YOU are a participant, including but not limited to DDR’s 401k Plan and Nonqualified Deferred Comp Plan (as defined below), shall govern all benefits thereunder to which you are entitled. YOU further understand and agree that the applicable provisions of the DDR plans covering equity and incentive awards shall govern any equity and incentive awards previously granted to YOU or to which YOU are entitled. In particular, YOU and DDR acknowledge that:
A. YOU were granted 40,000 restricted DDR Common Shares under a 2009 Retention Award Agreement with DDR and applicable DDR benefit plan
(the “Retention Restricted Shares”), that 10,000 of the Retention Restricted Shares fully vested on December 31, 2009, that 10,000 of the Retention Restricted Shares will become fully vested on December 31, 2010, and that 20,000 of the Retention Restricted Shares will be unvested as of the Separation Date. All unvested Retention Restricted Shares will not be forfeited by YOU as a result of the Separation Date, but instead all unvested Retention Restricted Shares will remain outstanding and will continue to vest without any risk of forfeiture according to the vesting schedule described in the 2009 Retention Award Agreement and applicable DDR benefit plan, and as set forth on Exhibit E to this Agreement, which is hereby incorporated into and made part of this Agreement;
B. Pursuant to the terms of DDR’s Value Sharing Equity Program (“VSEP”), YOU may earn and receive, on the date or dates provided for in the VSEP, Award Shares (as defined in the VSEP, the “VSEP Award Shares”), in accordance with the provisions of the VSEP through the Separation Date. Under the VSEP, all unvested VSEP Award Shares earned, held by YOU or that YOU are entitled to receive under the VSEP through the Separation Date will not be forfeited as a result of the Separation Date, but instead all unvested VSEP Award Shares will be issued as provided in the VSEP and/or will remain outstanding and will continue to vest without risk of forfeiture according to the vesting schedule described in the VSEP. YOU received 24,375 VSEP Award Shares on July 31, 2010, of which 19,500 remain unvested, and YOU will receive an additional award of VSEP Award Shares on January 31, 2011, one-fifth of which
will vest immediately and four-fifths of which will be unvested. YOUR unvested VSEP Award Shares shall vest as set forth on Exhibit E;
C. YOU have previously been granted options with respect to DDR Common Shares as set forth on Exhibit D pursuant to DDR’s equity-based award plans (the “Stock Options”). YOU shall have 90 days from the Separation Date to exercise the Stock Options;
D. YOU have previously been granted restricted DDR Common Shares as set forth on Exhibit D pursuant to DDR’s equity-based award plans (the “Restricted Shares”). YOU shall be entitled to receive all Restricted Shares which vest on or prior to the Separation Date in accordance with the applicable equity-based award plans and award agreements, as communicated to YOU by DDR;
E. YOU are entitled to all rights to any amounts deferred pursuant to the DDR Elective Deferred Compensation Plan (Amended and Restated as of January 1, 2004) (the “Nonqualified Deferred Comp Plan”), including YOUR elective deferrals and all DDR matching amounts and the right to take distributions in accordance with the provisions of the Nonqualified Deferred Comp Plan; and
F. YOU are entitled to all rights to any amounts deferred pursuant to the DDR 2005 Equity Deferred Compensation Plan (Amended and Restated as of January 1, 2009) (the “Nonqualified Deferred Equity Plan”), including the right to take distributions in accordance with the provisions of the Nonqualified
Deferred Equity Plan. YOU and DDR acknowledge that YOU have no current balance under the Nonqualified Deferred Equity Plan.
4. Application of Section 409A. Benefits provided under this Agreement are intended to be exempt from, or comply with, Section 409A of the Internal Revenue Code, which is the law that regulates severance pay. This Agreement shall be construed, administered, and governed in a manner that effects such intent, and DDR shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Agreement may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of additional tax under Code Section 409A. Without intending to limit the generality of the preceding provisions, YOU and DDR further acknowledge that the payment of $1,251,000 described in Section 2.A. of this Agreement is intended to be exempt from Section 409A as a short-term deferral and, to that end, have provided for payment to be made before March 15, 2011. Furthermore, the amount of $549,000 that is scheduled under Section 2.A above for payment in 2011 following the Separation Date (if YOU timely sign the Release and the Revocation Period expires without YOU revoking the Release) will be paid as scheduled in 2011 notwithstanding the fact that the Revocation Period will expire in 2010. Although DDR shall use its best efforts to avoid the imposition of taxation, interest and pena