EXHIBIT 10.1
SEPARATION AGREEMENT AND RELEASE
     This Separation Agreement and Release (“Agreement”) is made and entered
into this 26th day of January, 2010, by and between WILLIAM H. SCHAFER (“YOU” or
“YOUR”) and DEVELOPERS DIVERSIFIED REALTY CORPORATION (“DDR”). This Agreement
also will be binding on YOUR heirs, successors and assigns.
     DDR and YOU have agreed that YOUR employment with DDR will terminate on
February 15, 2010 (“Separation Date”). 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 2(c)
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.
     Under the terms of this Agreement, DDR and YOU further agree as follows:

1.   Based upon the consideration set forth in this Agreement (as described in
Paragraph 5), YOU agree to release DDR, its successors, owners, assigns,
divisions, affiliates, Board, officers, trustees, shareholders, directors, and
employees (hereinafter collectively termed the “DDR Released Parties”) from any
claims that have arisen or may arise out of YOUR employment with and separation
from DDR, whether now known or unknown,

 

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    including, but not limited to, all claims for wrongful discharge;
constructive discharge; all claims of breach of express or implied contract, or
promissory estoppel; all claims for damages resulting from injuries, harassment,
mental anguish and emotional distress; any claim of discrimination on any basis
including race, color, national origin, religion, sex, age or disability arising
under any federal, state or local statute, ordinance, order or law; all claims
of breach of public policy or tort; all claims of defamation; and all other
claims under Ohio or federal law, including, but not limited to, age
discrimination under the federal Age Discrimination in Employment Act, 29 U.S.C.
§ 621 et seq., Ohio R.C. Chapter 4112, and/or discrimination under Title VII of
the 1964 Civil Rights Act, as amended by the Civil Rights Act of 1991, 42 U.S.C.
§ 1981, and 42 U.S.C. § 1983. While YOU acknowledge and understand that by this
Agreement YOU release, among other things, any and all past and present rights
to recover money damages arising out of YOUR employment and termination, the
parties agree that this Agreement shall not preclude YOU from filing any charge
with the EEOC (or other governmental agency) or from in any way participating in
any investigation, hearing, or proceeding of the EEOC (or other governmental
agency).   2.   DDR’s officers, directors and executives and YOU agree not to
defame, disparage or otherwise attempt to damage, or encourage any third party
to defame, disparage or otherwise attempt to damage, YOUR name or YOUR
reputation, as well as that of DDR, its shareholders, directors, officers, or
employees.

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3.   DDR agrees that in the event any prospective employer inquires of DDR as to
a reference for YOU, DDR will, unless otherwise directed by YOU in writing,
disclose only the dates of YOUR employment, the positions YOU held, and the base
salary YOU were earning at the time of YOUR separation. Upon YOUR direction, a
positive reference regarding YOUR service to DDR and YOUR character will be
provided in a form reasonably satisfactory to YOU. All reference requests will
be directed to Human Resources.   4.   DDR agrees that it will not contest any
claim for unemployment compensation made by YOU. However, DDR will truthfully
respond to any inquiry from the Ohio unemployment commission.   5.   YOUR final
day of employment is the Separation Date, and any benefits provided to YOU
pursuant to YOUR employment with DDR 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. As consideration for this Agreement, YOU shall
receive severance pay equal to the aggregate sum of (a) one year of YOUR base
salary of $305,000 that was in effect at the end of 2009, plus (b) an amount
equivalent to YOUR maximum bonus opportunity of $244,000 for 2009 (as set forth
on Exhibit A to the Employment Agreement), plus (c) an amount equal to
$1,221,000 (which aggregate sum YOU and DDR agree equals a total gross amount of
$1,770,000 (“Severance Pay”)). Following

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    the conclusion of the Revocation Period (as described in Paragraph 6)
without YOUR revoking this Agreement, $1,221,000 of Severance Pay will be
payable in a lump sum payment, less all applicable deductions, within 10
business days, and $549,000 of Severance Pay will be payable in a lump sum
payment, less all applicable deductions, on the first business day of the first
calendar month following the Six Month Date (as such term is defined in the
Employment Agreement). DDR also will continue YOUR health and dental benefits
for YOU and YOUR eligible dependents (as defined by the applicable plan or
plans) for a period of two years beginning with the Separation Date, unless and
until YOU are eligible to receive from a subsequent employer alternative health
and dental benefits which are substantially equivalent or greater than the
health and dental benefits provided under this Agreement. The health and dental
coverage that YOU and YOUR family will receive is the same coverage YOU receive
as an active employee as of the Separation Date and will be provided under the
same terms as those applicable to DDR’s active employees. DDR also will provide
YOU, at DDR’s expense, with one year of outplacement services, and YOU and DDR
acknowledge that both parties have previously agreed to the identity of the
provider and nature of such outplacement services, with such services to be
utilized to a reasonable extent by YOU. Further, DDR will pay the reasonable
fees of counsel engaged by YOU to review this Agreement and to provide advice to
YOU in connection with the execution of and receipt by YOU of payments under
this Agreement; provided, however, that: (v) any

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    reimbursement of eligible expenses will be paid within 30 days following
YOUR written request for 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 the 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; (w) 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 (x) the right to
reimbursement will not be subject to liquidation or exchange for any other
benefit. YOU acknowledge (y) the sufficiency of the consideration described
above for YOUR promises and the general release detailed in this Agreement and
(z) that the payments, benefits and services described in this Paragraph 5
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.   6.  
YOU acknowledge that DDR has advised YOU that the release contained in this
Agreement does not apply to any rights or claims that may arise after the
execution date of this Agreement. YOU further acknowledge that DDR has advised
YOU to consult with an attorney before signing this Agreement. YOU also
acknowledge that YOU were offered up to twenty-one (21) days to consider this
Agreement. For seven (7) days after

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    this Agreement is executed (the “Revocation Period”), YOU have the right to
revoke the Agreement. This Agreement shall not become effective or enforceable,
and YOU shall not receive the payments, benefits and services described in
Paragraph 5 above, until such Revocation Period has expired. YOUR written notice
of the revocation of this Release shall be delivered by certified or registered
mail (first class postage pre-paid), guaranteed overnight delivery or personal
delivery to the following address: Senior Vice President of Human Resources,
Developers Diversified Realty Corporation, 3300 Enterprise Parkway, Beachwood,
Ohio 44122.   7.   YOU acknowledge that the promises referred to in Paragraph 5
and the waiver by DDR of YOUR covenant not to compete referred to in
Paragraph 11 are solely in exchange for the promises in this Agreement and are
not normally available to DDR’s employees. YOU further acknowledge that DDR’s
agreement to pay and provide the amounts described in Paragraph 5 and the waiver
by DDR of YOUR covenant not to compete referred to in Paragraph 11 do not
constitute an admission by the DDR Released Parties of liability or of violation
of any applicable law or regulation. DDR states that payment and its waiver of
YOUR covenant not to compete referred to in Paragraph 11 has been provided
solely for the purpose of compromising any and all claims without the cost and
burden of litigation and in light of YOUR service as an employee and the
parties’ desire to accomplish a mutually amicable separation.

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8.   No later than the 15th day following the Separation Date (or such other
date to which YOU and DDR mutually agree), YOU shall deliver to Human Resources
any property of DDR in YOUR control or possession, including keys, documents,
computer software and hardware (except as provided below), manuals, office
equipment, phones and PDAs, credit cards and files. DDR and YOU agree that YOU
will retain possession of the laptop computer previously provided to YOU by DDR.
  9.   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 (the “Restricted Shares”) and 10,000 of the
Restricted Shares fully vested on December 31, 2009. All vested and unvested
Restricted Shares will not be forfeited by YOU as a result of the Separation
Date, but instead any unvested Restricted Shares will remain outstanding and
will continue to vest according to the vesting schedule described in the 2009
Retention Award 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. Under the VSEP, any vested or
unvested VSEP

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      Award Shares earned, held by YOU or that YOU are entitled to receive under
the VSEP will not be forfeited as a result of the Separation Date, but instead
unvested VSEP Award Shares will be issued as provided in the VSEP and/or will
remain outstanding and will continue to vest according to the vesting schedule
described in the VSEP;     c.   YOU have previously been granted options with
respect to 96,273 DDR Common Shares pursuant to DDR’s equity-based award plans
(the “Stock Options”), which Stock Options are fully vested as of the date of
this Agreement. YOU shall have the applicable time periods provided for under
the applicable equity-based award plans and award agreements, as communicated to
YOU by DDR, to exercise the Stock Options;     d.   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 Plan”), including the right to take distributions in accordance
with the provisions of the Nonqualified Plan;     e.   YOU are a party to an
Outperformance Long-Term Incentive Plan Agreement with DDR (the “Outperformance
Agreement”), and YOUR right to receive a payment, if any, under the
Outperformance Agreement is not subject to forfeiture based on your Separation
Date. YOU shall be entitled to receive payment, if any, under the terms and
provisions of the Outperformance Agreement; and

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  f.   YOU shall be entitled to receive, to the extent not already paid, a lump
sum amount equal to YOUR bonus compensation actually earned by YOU for the 2009
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, 2010, which bonus compensation will be not
less than the target amount to which you are entitled under the Employment
Agreement.

10.   This Agreement, including without limitation the release provisions, is
being presented in accordance with and shall be deemed to fully satisfy DDR’s
obligations and rights under the Employment Agreement, including Section 6 of
the Employment Agreement. YOUR failure to execute and return this Agreement
within a reasonable period of time relieves DDR of any obligation to make
payments to YOU under the Employment Agreement or otherwise (including under
Paragraph 5 of this Agreement) or to waive YOUR covenant not to compete as
described in Paragraph 11 of this Agreement.   11.   YOUR covenants and
obligations, as more fully described in Section 7 of the Employment Agreement,
including without limitation YOUR non-solicitation covenant as provided for in
Section 7(b) of the Employment Agreement, remain in full force and effect;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, YOUR compliance with YOUR covenant not to compete, as provided for in
Section 7(a)(i) of the Employment Agreement, is hereby waived by DDR.
Additionally,

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    YOUR obligations detailed in Section 9(b) of the Employment Agreement remain
in full force and effect, and DDR’s obligations provided for under Section 8 of
the Employment Agreement remain in full force and effect. These obligations
shall survive, regardless of any other breach of this Agreement.   12.   If
requested by DDR, YOU will sign the management representation letter required by
PricewaterhouseCoopers LLP in connection with their annual audit of DDR’s
consolidated financial statements as of December 31, 2009 and 2008 and for the
three years ended December 31, 2009 prior to the filing of DDR’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2009.   13.   YOU also
acknowledge that YOU have carefully read and fully understand the terms,
considerations, and consequences of this Agreement, including the release of any
of YOUR potential claims. YOU further acknowledge that YOU have not relied upon
any other representations or statements, whether written or oral, and that this
Agreement contains the entire agreement between YOU and DDR regarding the
termination of YOUR employment with DDR. YOU further acknowledge that the
covenants and promises made by YOU in this Agreement are in consideration of the
payments and other promises made hereunder by DDR, which YOU acknowledge to be
sufficient, just and adequate consideration for YOUR covenants and promises. YOU
acknowledge that but for YOUR execution of this Agreement, YOU would not be
entitled to all of the amounts or benefits being paid or provided to YOU
hereunder.

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14.   In the event that any provision of this Agreement, with the exception of
YOUR release of claims, is found, by any court or governmental agency, to be
unlawful or unenforceable, DDR and YOU have the right to require the other party
to continue complying with the remaining provisions of this Agreement or the
Agreement as a whole as may be modified by the court. In the event of a breach
of this Agreement by YOU or DDR, either party may seek relief and/or enforcement
in a court of competent jurisdiction.   15.   The parties agree that:
(a) neither this Agreement nor compliance with its terms shall be construed as
an admission by DDR Released Parties of a violation of any statutory,
contractual, quasi-contractual, common law or other right of YOURS; and
(b) neither this Agreement nor the fact of its delivery to YOU shall be
admissible in any proceeding as evidence of unlawful or improper conduct by DDR
Released Parties. DDR Released Parties expressly disclaim any liability to YOU
arising out of YOUR employment, separation of employment and otherwise.   16.  
The Parties agree that this Agreement shall be construed in accordance with Ohio
law, that any action brought by any party hereunder may be instituted and
maintained only in the appropriate court having jurisdiction over Cuyahoga
County, Ohio, and that this Agreement shall be interpreted in accordance with
the plain meaning of its terms and not strictly for or against any party.

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                DEVELOPERS DIVERSIFIED REALTY CORPORATION
    /s/ William H. Schafer   By:   /s/ Daniel B. Hurwitz     William H. Schafer 
    Name:   Daniel B. Hurwitz          Title:   President & CEO     Date:
1/26/10       Date: 1/26/10   

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