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.
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.
2
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.
3
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
4
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 [30] 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
5
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
6
(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
7
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
8
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
|
