**Exhibit10.8**

 

[TRAMMELL CROW COMPANY LETTERHEAD]

 

April 27, 2004

 

Diane Paddison

[XXXXXXXXXX]

[XXXXXXXXXX]

 

Re:          Employment Agreement

 

Dear Diane:

 

We are pleased to presentyou with this employment letter agreement (“Agreement”) which sets forth theterms upon which you will continue to be employed by Trammell Crow Company (the“Company”, or “we”, or “us”).

 

**1.             **Employment Period****.  Subject to the terms and provisions of thisAgreement, we agree to continue to employ you, and you agree to continue to beemployed by us, for a period (the “Employment Period”) commencing on thedate hereof and expiring December 31, 2006; provided, that on December 31, 2006and on each subsequent December 31, this Agreement will automatically beextended for one additional year unless, during the four****monthperiod beginning March 1 and ending July 1 immediately prior to thenext scheduled extension, you or we will have given written notice (a “Non-RenewalNotice”) that the Employment Period will not be extended (a “Non-Renewal”).

 

**2.             **Employment Terms and Conditions****.

 

(a)           Position and Duties; Extent of Services; Location.  During the Employment Period, you will serveinitially as National Director of Client Services of the Company and from timeto time will serve in such other positions as the Board of Directors of theCompany (the “Board”) may from time to time determine.  In so doing, you will have such powers andduties (including holding officer positions with one or more Subsidiaries ofthe Company) as may be assigned from time to time by the Board.  During the Employment Period, you willdevote your full business time, energy, and best efforts to the business andaffairs of the Company.  You agree notto engage, directly or indirectly, in any other business, investment, or activitythat interferes with your performance of your duties under this Agreement, iscontrary to the interests of the Company or requires any portion of yourbusiness time, provided, however, that (i) you may serve on the board ofdirectors (or similar governing body) of one public company if the Board hasprovided prior approval for such service, and (ii) unless it would

 

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unreasonablyinterfere with your performance of your duties to the Company, you may serve onthe board of directors (or similar governing body) of no more than **one** other 

 

organizationthat does not directly or indirectly conduct a Competing Business (as definedherein), in each case which boards shall be in addition to the boards ofdirectors (or similar governing bodies) on which you serve at the request ofthe Company.   The location of yourprincipal work office will be Dallas, Texas. “Subsidiary” means any entity 50% or more of the votingsecurities of which are owned, directly or indirectly, by the Company.

 

(b)           Compensation.  During the Employment Period, you will receive an annual basesalary (“Annual Base Salary”), payable in accordance with the customarypayroll practices of the Company for executive officers.  The Board, in its sole discretion, may atany time increase the amount of the Annual Base Salary as it may deemappropriate.  From time to time prior toa Change in Control, and following the second anniversary of such Change inControl, the Board may decrease your Annual Base Salary in the same manner andto the same proportional extent as the average (mean) percentage decrease inthe annual base salaries of all other members of the Executive OfficerCommittee.  The term “Annual BaseSalary” will refer to the Annual Base Salary as it may be so adjusted fromtime to time.  In addition, during theEmployment Period, you will (i) be eligible to receive such annual bonuspayments, if any, as the Board or the Compensation Committee of the Board mayspecify in its sole discretion (each an “Annual Bonus”), subject to anyterms or conditions as may be established by the Board or its CompensationCommittee, provided, that you will be provided an individual “annual incentiveplan” for each year and any performance criteria included in such incentiveplan **must** bereasonably achievable**,**(ii) be entitled to participate in all incentive, savings, stock option, profitsharing and retirement plans, practices, policies and programs applicablegenerally to other executives of the Company (“Investment Plans”),subject to all of the terms and conditions of such Investment Plans; and (iii)be eligible to participate in all health, life and disability insurancepolicies, all death and disability plans, practices, policies and programs andall other welfare benefit plans, practices, policies and programs which are ineach such case applicable generally to other executives of the Company (“WelfarePlans”), subject to all of the terms and conditions of such WelfarePlans.  Subject to Sections 4 and 5, anyAnnual Bonus awarded to you by the Board or the Compensation Committee of theBoard for any calendar year will be payable in March of the following year,whether or not you are employed by the Company at such time. The term “ExecutiveOfficer Committee” will refer to the Company’s Executive Officer Committee,any successor committee thereto, and if there is no longer such a committee atthe time in question, then a comparable group of the Company’s executiveofficers (as defined in Rule 3b-7 promulgated under the Securities Exchange Actof 1934).

 

(c)           Vesting of Equity Awards.  Notwithstanding the provisions of any planor agreement governing such an Award (as defined in Section4(c)), all Awards granted to you that remain outstanding andunvested immediately prior to the occurrence of a Change in Control (as definedin Section 4(d)(i)) automatically shallvest in full upon the occurrence of the Change in Control.

 

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**3.             **Termination of Employment****.

 

(a)           Death.  Your employment hereunder will terminateautomatically upon your death.

 

(b)           Disability. If your Disability occurs, we may give you a written Notice ofTermination (herein so called), and your employment will terminate effective 30days later if you have not returned to perform, with or without reasonableaccommodation, the essential functions of your position on a full-timebasis.  “Disability” means yourinability, due to physical or mental incapacity or impairment, to perform thematerial duties of yourposition(s) with the Company forany period of more than 120 consecutive days, or for more than 180 days,regardless of how consecutively they occur, during any 360-day period.

 

(c)           Termination by Us.  We may terminate your employment hereunder at any time (A),subject to Section 6(b), for Cause or (B) for any reason other thanCause.  “Cause” means (i) yourcontinued failure to substantially perform your obligations and duties, asdetermined in good faith by the Board, and which is not remedied within 30 daysafter your receipt of written notice thereof; (ii) commission of an act offraud, embezzlement, misappropriation, willful misconduct or breach offiduciary duty against the Company or other conduct materially harmful orpotentially materially harmful to the Company’s best interest, as determined ingood faith by the Board; (iii) material breach of Section 7 or 8which is not cured within 30 days after your receipt of notice thereof, if suchbreach is capable of being cured; (iv) conviction, plea of no contest or nolocontendere, deferred adjudication or unadjudicated probation for any felony orany crime involving moral turpitude; (v) failure to carry out, or comply with,in any material respect, any lawful directive of the Board consistent with theterms of this Agreement, which is not remedied within 30 days after receipt ofwritten notice thereof; or (vi) unlawful use (including being under theinfluence) or possession of illegal drugs.

 

(d)           Resignation byYou.  You may terminate youremployment hereunder at any time (i) subject to Section 6(a), forGood Reason or (ii) without Good Reason. Prior to a Change in Control and following the second anniversary ofsuch Change in Control, “Good Reason” means (A) any material diminution(considering all previous diminutions during the Employment Period in theaggregate, including all previous diminutions during the Employment Periodwhich are not material when considered separately) in your position, authority,powers, functions, duties or responsibilities; provided, however, that GoodReason may not be asserted by you under this clause (A) after a Non-RenewalNotice has been given; (B) the relocation or transfer of your principaloffice to a location more than 50 miles from your regular work address as ofthe date hereof without your consent; **(C) any reduction in your Annual Base Salary to an amount that is lessthan 90% of the highest Annual Base Salary in effect for you during theEmployment Period;******(D) anyreduction in your Annual Bonus Target from your Annual Bonus Target for thecalendar year 2003; (E) the receipt by you of Awards (excluding Non-PerformanceAwards) in any calendar year that differ (as to number, terms or type ofAwards), in a manner adverse to you, from the Award of 57,500 stock optionsreceived by certain members of the Executive Officer Committee in calendar year2002, unless either (1)

 

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such adversedifferences are in the same manner and to the same proportional extent as theaverage (mean) changes made to the Awards (excluding Non-Performance Awards)received by all other members of the Executive Officer Committee (excluding theChief Executive Officer of the Company) in such calendar year (for purposes ofthis clause (1), any member of the Executive Officer Committee in such calendaryear who was not a member of the Executive Officer Committee in calendar year2002 shall be deemed to have received an Award of 57,500 stock options incalendar year 2002) or (2) such adverse differences are directly related to theBoard’s good faith assessment of your relative contribution to the Company oryour relative performance as compared to other members of the Executive OfficerCommittee****(excludingthe Chief Executive Officer of the Company); provided,however, that in the case of adverse differences pursuant to clause (2), thereceipt by you of a number of any type of Award in such calendar year that isless than one-half of the Final Average Number of Awards of such type for suchcalendar year shall constitute Good Reason; or (F) any failure by the Companyto comply with any of the provisions of Section 2(b) which failureis not contemplated previously within this definition, excluding in all suchcases any isolated, insubstantial and inadvertent failure not occurring in badfaith and which is remedied by the Company promptly after receipt of noticethereof given by you.  Upon or after aChange in Control but prior to the second anniversary of such Change inControl, “Good Reason” means (A) any material diminution(considering all previous diminutions during the Employment Period in theaggregate, including all previous diminutions during the Employment Periodwhich are not material when considered separately) in your position authority,powers, functions, duties or responsibilities in effect immediately prior tothe Change in Control (subject to the same exclusions as provided above priorto a Change in Control and following the second anniversary of such Change inControl); (B) any reduction in your Annual Base Salary;(C) (i) any reduction in your Annual Bonus Target from your AnnualBonus Target for the calendar year 2003 or (ii) the awarding to you of anAnnual Bonus that is less in amount than the Annual Bonus awarded to you forthe calendar year immediately preceding the year during which the Change inControl occurs; (D) the receipt by you of Awards (excludingNon-Performance Awards) in any calendar year that differ (as to number, termsor type of Awards), in a manner adverse to you, from the Award of 57,500 stockoptions received by certain members of the Executive Officer Committee incalendar year 2002, unless either (1) such adverse differences are in the samemanner and to the same proportional extent as the average (mean) changes madeto the Awards (excluding Non-Performance Awards) received by all other membersof the Executive Officer Committee (excluding the Chief Executive Officer ofthe Company) in such calendar year (for purposes of this clause (1), any memberof the Executive Officer Committee in such calendar year who was not a memberof the Executive Officer Committee in calendar year 2002 shall be deemed tohave received an Award of 57,500 stock options in calendar year 2002) or (2)such adverse differences are directly related to the Board’s good faithassessment of your relative contribution to the Company or your relativeperformance as compared to other members of the Executive Officer Committee(excluding the Chief Executive Officer of the Company); provided, however, thatin the case of adverse differences pursuant to clause (2), the receipt by youof a number of any type of Award in such calendar year that is less thanone-half of the Final Average Number of Awards of such type for such 

 

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calendar yearshall constitute Good Reason; or (E) any failure by the Company to complywith any of the provisions of Section 2(b) which failure is notcontemplated previously within this definition; or (F) the relocation ortransfer of your principal office to a location more than 50 miles from yourregular work address as of the date hereof without your consent, excluding inall such cases any isolated, insubstantial and inadvertent failure notoccurring in bad faith and which is remedied by the Company promptly afterreceipt of notice thereof given by you. As used in this Agreement:

 

(i)            “Annual BonusTarget” means the percentage of your Annual Base Salary that is authorizedto be awarded to you as an Annual Bonus if certain performance criteria aremet.

 

(ii)           “Final Average Number of Awards” means, forany calendar year and for each type of Award granted during such year, thequotient (rounded up to the nearest whole number) equal to the aggregate numberof Awards of such type (excluding Non-Performance Awards) received by allmembers of the Adjusted EOC Group in such calendar year, divided by the numberof members of the Adjusted EOC Group in such calendar year.

 

(iii)          “Adjusted EOC Group” means, for any calendaryear and for each type of Award granted during such year, the members of the ExecutiveOfficer Committee who are eligible to receive Awards of such type (excludingmembers of the Executive Officer Committee who receive Non-Performance Awards)in such calendar year, excluding the Chief Executive Officer of the Company andeach Outlier Award Recipient in such calendar year; provided, however, that ifmore than 50% of the members of the Executive Officer Committee for anycalendar year are determined to be Outlier Award Recipients in such calendaryear, then, notwithstanding the foregoing, all members of the Executive OfficerCommittee (excluding the Chief Executive Officer of the Company) who areeligible to receive Awards of such type (excluding members of the ExecutiveOfficer Committee who receive Non-Performance Awards) in such calendar yearshall be included in the Adjusted EOC Group for such calendar year with respectto such type.

 

(iv)          “Non-PerformanceAwards” means, for any calendar year and for each type of Award grantedduring such year, Awards of such type received by members of the ExecutiveOfficer Committee that are granted to such members primarily in recognition ofpromotions (as to position, authority, powers, functions, duties orresponsibilities) or in recognition of becoming a member of the ExecutiveOfficer Committee.

 

(v)           “Outlier Award Recipient”means, for any calendar year and for each type of Award granted during suchyear, each member of the Executive Officer Committee (excludingthe Chief Executive Officer of the Company) who is eligible to receive Awardsof such type (excluding any member of the Executive Officer Committee whoreceives Non-Performance Awards) in such calendar year and who receives anumber of Awards of such type (excluding

 

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Non-PerformanceAwards) in such calendar year that is (i) 150% or more of the PreliminaryAverage Number of Awards or (ii) 66 2/3% or less of the Preliminary AverageNumber of Awards.

 

(vi)          “Preliminary Average Number of Awards” means,for any calendar year and for each type of Award granted during such year, thequotient (rounded up to the nearest whole number) equal to the aggregate numberof Awards of such type (excluding Non-Performance Awards) received by allmembers of the Executive Officer Committee (excluding the Chief ExecutiveOfficer of the Company) in such calendar year, divided by the number of membersof the Executive Officer Committee (excluding the Chief Executive Officer ofthe Company) who are eligible to receive Awards of such type (excluding membersof the Executive Officer Committee who receive Non-Performance Awards) in suchcalendar year.

 

(vii)         The phrase “numberof Awards” refers to the underlying number of shares of capital stock of theCompany to which the applicable Award relates.

 

(e)           Expiration of Term.  Your employment will end at the expiration of the EmploymentPeriod as a result of any Non-Renewal. Except as described in Sections 3(e)(i), (ii), and (iii)and in the definition of Change in Control, a termination of your employmentunder this Agreement due to the expiration of the Employment Period as a resultof any Non-Renewal will not be deemed a termination of your employmententitling you to any benefits described in Section 4 or Section 5.

 

(i)            If the Companydelivers a Non-Renewal Notice to you prior to any Change in Control or afterthe second anniversary of such Change in Control, upon the effectiveness ofsuch Non-Renewal you will be entitled to receive (i) an amount equal to yourPro Rata Bonus, which will be paid at such time as the Company pays its othermembers of the Executive Officer Committee their annual cash incentive bonuseswith respect to the calendar year in which termination occurs, (ii) theseverance or separation benefits (including continuation of any welfarebenefits) provided generally by us to the members of the Executive OfficerCommittee under our general policies in effect from time to time upontermination by the Company of their employment (excluding any other severanceor separation benefits available to any member of the Executive OfficerCommittee pursuant to an employment agreement and not under our generalpolicies in effect from time to time), and (iii) the other compensation andbenefits described in Section 4(b).

 

(ii)           If the Companydelivers a Non-Renewal Notice to you after a Change in Control but prior to thesecond anniversary of such Change in Control, you will have the rightsdescribed in Section 5(c) upon the effectiveness of such Non-Renewal.

 

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(iii)          If any Non-Renewalis effected at your election, you will be entitled to receive (i) an amountequal to your Pro Rata Bonus, which will be paid at such time as the Companypays its other members of the Executive Officer Committee their annual cashincentive bonuses with respect to the calendar year in which terminationoccurs, and (ii) the other compensation and benefits described in Section4(b) upon the effectiveness of such Non-Renewal.

 

(f)            Agreement Not toTerminate.  We agree that,notwithstanding any provision to the contrary contained in this EmploymentAgreement, we shall not have the right to terminate your employment, other thanfor Cause, for a period of time commencing on the date of this Agreement andending on the 180th day following the date of this Agreement.

 

**4.            ****Compensation UponTermination Prior to a Change in Control and After the Second Anniversary ofsuch Change in Control**. Prior to a Change in Control and after the second anniversary of suchChange in Control, conditioned on the effectiveness of a Release signed by youor your legal representative, you will be entitled to the followingcompensation from the Company upon the termination of your employment, which isin lieu of any other severance pay or employment benefits to which you mightotherwise be entitled (whether contractual, under a severance plan, the WARNAct, any other applicable law, or otherwise):

 

(a)           Death or Disability.  If your employment is terminated by reasonof your death or Disability, the Company will pay you or your legalrepresentative, as applicable, (A) in a cash lump sum within thirty (30) daysafter the effective date of the Release, the following amounts:  (1) the sum of your unpaid Annual BaseSalary through the date of termination and any compensation previously deferredby you (together with any accrued interest or earnings thereon) (“AccruedObligations”); and (2) the amount of any unpaid Annual Bonus that wasawarded to you prior to the date of termination; (B) any amounts arisingfrom your participation in any Investment Plan (“Accrued Investments”),which amounts will be payable in accordance with the terms and conditions ofsuch Investment Plan; (C) any amounts to which you are entitled from yourparticipation in, or benefits under, any Welfare Plan (“Accrued WelfareBenefits”), which amounts will be payable in accordance with the terms andconditions of such Welfare Plan; and (D) an amount equal to your Pro RataBonus, which will be paid at such time as the Company pays its other members ofthe Executive Officer Committee their annual cash incentive bonuses withrespect to the calendar year in which termination of your employmentoccurs.  “Pro Rata Bonus” meansthe amount equal to the product of (i) your Annual Bonus Target for thecalendar year in which your employment is terminated (or your Annual BonusTarget for the immediately preceding year if you resign for Good Reason asdefined in the first clause (D) or the second clause (C)(i) of Section3(d)), multiplied by (ii) the amount of your Annual Base Salary for thecalendar year in which your employment is terminated (or the highest AnnualBase Salary to which you were entitled during the twelve months immediatelypreceding the date of termination if you resign for Good Reason as defined inthe first clause (C) or the second clause (B) of Section 3(d)), multipliedby (iii) the average (mean) percentage of annual cash incentive bonustargets actually paid as bonuses to the **members of the Executive Officer Committee**as a groupfor such year, and multiplied by (iv) a fraction, the numerator of whichis the number of days that have

 

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elapsed insuch calendar year as of the date of termination, and the denominator of whichis 365.  Except as described in this Section 4(a), in the event of yourtermination by reason of your death or Disability, you and your legalrepresentatives, as applicable, will forfeit all rights to any othercompensation.

 

(b)           For Cause;Resignation by You Without Good Reason; Non-Renewal Election by You or theCompany.  If your employment isterminated by us for Cause or by you without Good Reason or due to aNon-Renewal election by us or you, we will have no further obligations to youother than as set forth in Section 3(e), if applicable, and theobligation for payment of (i) Accrued Obligations (which will be payable withinthe time period set forth in Section 4(a)(A) above), (ii) the AccruedInvestments and the Accrued Welfare Benefits (which will be payable inaccordance with the terms and conditions of the Investment Plans and theWelfare Plans, as applicable), and (iii) the amount of any unpaid Annual Bonusthat was awarded to you prior to the date of termination (which will be payablewithin the time period set forth in Section 4(a)(A) above).  Except as described in this Section 4(b)or in Section 3(e), if applicable, in the event of your termination bythe Company for Cause or due to your resignation without Good Reason or aNon-Renewal election by us or you, you will forfeit all rights to any othercompensation.

 

(c)           Without Cause; Resignation for Good Reason.  If we terminate your employment withoutCause or you resign for Good Reason, then we will pay or provide to you:

 

(i)            a cash lump sumwithin thirty (30) days after the effective date of the Release equal to theaggregate of the following amounts:  (A)the Accrued Obligations; (B) an amount equal to one and twenty-five onehundredths (1.25) multiplied by the sum of (x) the highest Annual Base Salaryto which you were entitled during the twelve months immediately preceding thedate of termination, and (y) the sum of (i) one-half of your average (mean)Annual Bonus awarded to you for the three years preceding termination, plus(ii) one-half of the product of your current Annual Bonus Target (or yourAnnual Bonus Target for the immediately preceding year if you resign for GoodReason as defined in the first clause (D) of Section 3(d)), multiplied by theamount of your Annual Base Salary for the calendar year in which your employmentis terminated (or the highest Annual Base Salary to which you were entitledduring the twelve months immediately preceding the date of termination if youresign for Good Reason as defined in the first clause (C) of Section 3(d)); and(C) the amount of any unpaid Annual Bonus that was awarded to you prior to thedate of termination;

 

(ii)           an amount equal toyour Pro Rata Bonus, which will be paid at such time as the Company pays itsother members of the Executive Officer Committee their annual cash incentivebonuses with respect to the calendar year in which termination of youremployment occurs;

 

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(iii)          the AccruedInvestments and the Accrued Welfare Benefits, which amounts will be payable inaccordance with the terms and conditions of the Investment Plans and theWelfare Plans, as applicable;

 

(iv)          if you are entitledon the date of termination to coverage under the healthcare portion of the **Trammell Crow andAssociated Companies Welfare Benefits Plan or a similar Company group healtharrangement  (the “Health Plan”)**,continuation of such coverage for you and your dependents for a period endingon the 180th day following the second (2nd)****anniversaryof the date of termination, at the active employee cost payable by you withrespect to those costs paid by you prior to your termination; provided,however, that this coverage will count towards the depletion of any continuedhealth care coverage rights that you and your dependents may have pursuant tothe Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”);provided further, however, that you or your dependents’ rights to continuedhealth care coverage pursuant to this Section will terminate at the time you oryour dependents become covered, as described in COBRA, under another grouphealth plan, and will also terminate as of the date the Company ceases toprovide coverage to its senior executives generally under any such Health Plan;and

 

(v)           upon your requestand at the Company’s sole cost and expense, your enrollment in an outplacementprogram with a placement agency selected by the Company, and reasonablyacceptable to you, for a period of up to twelve months, commencing on the dateof termination.

 

Notwithstanding theprovisions of any plan or agreement governing such an Award, the Company alsowill continue to vest all of your outstanding Awards that would have otherwisevested during the eighteen (18) month period beginning on the date oftermination and such Awards will continue to vest and, if applicable, beexercisable during such eighteen (18) month period; provided, that nothing setforth herein shall result in an extension of the term of any Award beyond the term of the Award that would beapplicable absent any termination of your employment; provided further,however, that, in the case of a termination of your employment pursuant to thisSection 4(c), if the terms of the plan or agreement governing such Awardare more favorable to you as to vesting or exercisability than the terms ofthis paragraph, then the more favorable term(s) of such Award agreement or plan(in lieu of the corresponding less favorable term(s) in this paragraph) shallgovern the vesting or exercisability, as the case may be, of such Award uponyour termination. “Award” means any option to acquire common stock,restricted stock award, stock appreciation right or similar equity-based awardgranted under the Trammell Crow Long-Term Incentive Plan or any other option orequity-based incentive plan sponsored by the Company.  Except as described in this Section4(c), in the event of your termination by us without Cause or by youfor Good Reason, you will forfeit all rights to any other compensation.

 

(d)           As used in thisAgreement:

 

(i)            “Change inControl” has the meaning given such term in the Trammell Crow Long-TermIncentive Plan (as such plan is in effect on the

 

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date of thisAgreement, the “LTIP”); provided, however, that the occurrence of a Rule 13e-3transaction (within the meaning of Rule 13e-3 promulgated under the SecuritiesExchange Act of 1934 or any similar successor rule thereto) that has beenapproved by the Board and subsequent to which you are part of a group (withinthe meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of1934 or any similar successor rule thereto) that owns more than 50%,respectively, of the then outstanding shares of common stock and the combinedvoting power of the then outstanding voting securities entitled to votegenerally in the election of directors of the Company will not be deemed to bea Change in Control; provided, further, if, prior to any Change in Control, youterminate your employment for Good Reason or your employment is terminated bythe Company without Cause or as a result of a Non-Renewal Notice delivered bythe Company prior to such Change in Control and a Change in Control occurswithin 180 days after such termination, or within 180 days after suchNon-Renewal Notice delivery in the case of a Non-Renewal (excluding a Change inControl that occurs pursuant to an unsolicited tender or exchange offer by anyperson, in response to which the Company does not recommend acceptance of theperson’s tender or exchange offer), then for all purposes hereof, the date ofthe Change of Control with respect to your employment shall mean the dateimmediately prior to such termination, or immediately prior to such Non-RenewalNotice delivery in the case of a Non-Renewal; provided, further thatnotwithstanding that any such transaction does not constitute a Change inControl as defined in the LTIP, a Change in Control shall be deemed to haveoccurred for all purposes under this Agreement upon either (A) the consummationof a Business Combination (as defined in the LTIP) with a National Competitor,unless, following such Business Combination, the conditions in clauses (B) and(C) of Section 1.6 (iii) of the LTIP are satisfied and all orsubstantially all of the individuals and entities who were the beneficialowners of, respectively, the Outstanding Corporation Common Stock andOutstanding Corporation Voting Securities (each as defined in the LTIP)immediately prior to such Business Combination beneficially own, directly orindirectly, more than 60%, respectively, of the then outstanding shares ofcommon stock and the combined voting power of the then outstanding votingsecurities entitled to vote generally in the election of directors of thecorporation resulting from such Business Combination (including, without limitation,a corporation which as a result of such transaction owns the Company, or all orsubstantially all of the Company’s assets either directly or through one ormore subsidiaries) in substantially the same proportions as their ownership,immediately prior to such Business Combination, of the Outstanding CorporationCommon Stock and Outstanding Corporation Voting Securities, as the case may be,or (B) the acquisition by any National Competitor (or any group (as defined inthe LTIP) of which a National Competitor is a controlling (within the meaningof Rule 12b-2 promulgated under the Securities Exchange Act of 1934) member ofthe group) of beneficial ownership (within the meaning of Rule 13d-3promulgated under the Securities Exchange Act of 1934) of 40% or more of eitherthe Outstanding Corporation Common Stock or the Outstanding Corporation VotingSecurities.  By way of clarification,any transaction with a National

 

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Competitorthat constitutes a Change in Control as defined in the LTIP shall be considereda Change in Control for all purposes under this Agreement.

 

(ii)           “NationalCompetitor” means any one of the companies known as Jones Lange LaSalle,Inc., Grubb and Ellis Co. and CB Richard Ellis or their respective successors.

 

**5.             **Compensation Upon Termination OccurringOn or Within Two Years After a Change in Control****.  After a Change in Control and on or beforethe second anniversary of such Change in Control, conditioned on theeffectiveness of a Release signed by you or your legal representative, you willbe entitled to the following compensation from the Company upon termination ofyour employment (including a termination resulting from the delivery of aNon-Renewal Notice by the Company or you during such two-year period), whichshall be in lieu of any other severance pay or employment benefits to which youmight otherwise be entitled (whether contractual, under a severance plan, theWARN Act, any other applicable law, or otherwise):

 

(a)           Death or Disability.  If your employment is terminated by reasonof your death or Disability, the Company will pay you or your legalrepresentative, as applicable, (A) in a cash lump sum within thirty (30) daysafter the effective date of the Release, the following amounts:  (1) the Accrued Obligations; and (2) theamount of any unpaid Annual Bonus that was awarded to you prior to the date oftermination; (B) the Accrued Investments, which amounts will be payable inaccordance with the terms and conditions of the Investment Plans; (C) theAccrued Welfare Benefits, which amounts will be payable in accordance with theterms and conditions of the Welfare Plans; and (D) an amount equal to your ProRata Bonus, which will be paid at such time as the Company pays its other membersof the Executive Officer Committee their annual cash incentive bonuses withrespect to the calendar year in which termination of your employmentoccurs.  Except as described in this Section5(a), in the event of your termination by reason of your death orDisability, you and your legal representatives, as applicable, will forfeit allrights to any other compensation.

 

(b)           For Cause; Resignation by You Without Good Reason.  If your employment is terminated by us forCause or by you without Good Reason, we will have no further obligations to youother than for payment of (i) Accrued Obligations (which will be payable withinthe time period set forth in Section 5(a)(A) above), (ii) theAccrued Investments and the Accrued Welfare Benefits (which will be payable inaccordance with the terms and conditions of the Investment Plans and theWelfare Plans, as applicable), and (iii) the amount of any unpaid Annual Bonusthat was awarded to you prior to the date of termination (which will be payablewithin the time period set forth in Section 5(a)(A) above).  Except as described in this Section 5(b), in the eventof your termination by the Company for Cause or due to your resignation withoutGood Reason, you will forfeit all rights to any other compensation.

 

(c)           Without Cause; Resignation for Good Reason; Non-RenewalElection by Company.  If youremployment is terminated by the Company without Cause or due to a Non-Renewalelection made by the Company as provided in Section 3(e)(ii) or byyou for

 

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Good Reason(taking into account in each such case the definition of Change in Control),then, in lieu of any other severance pay or benefits, and conditioned on theeffectiveness of a Release signed by you, the Company will pay or provide toyou:

 

(i)            a cash lump sumwithin thirty (30) days after the effective date of the Release equal to theaggregate of the following amounts:  (A)the Accrued Obligations; (B) an amount equal to two (2.0) multiplied by the sumof (x) the highest Annual Base Salary to which you were entitled during thetwelve months immediately preceding the date of termination, and (y) the sum of(i) one-half of your average (mean) Annual Bonus awarded to you for the threeyears preceding termination (or the three years preceding the year to which theAnnual Bonus in question relates if you resign for Good Reason as defined inthe second clause (C)(ii) of Section 3(d)), plus (ii) one-half of the productof your current Annual Bonus Target (or your Annual Bonus Target for theimmediately preceding year if you resign for Good Reason as defined in thesecond clause (C)(i) of Section 3(d)), multiplied by the amount of yourAnnual Base Salary for the calendar year in which your employment is terminated(or the highest Annual Base Salary to which you were entitled during the twelvemonths immediately preceding the date of termination if you resign for GoodReason as defined in the second clause (B) of Section 3(d)); and (C) the amountof any unpaid Annual Bonus that was awarded to you prior to the date oftermination; provided, however, that if the Company fails to make such lump sumpayment when due and such failure continues for ten (10) days following noticeof nonpayment to the Company, the amount of the payment the Company isobligated to make pursuant to this Section 5(c)(i) shall automatically beincreased by twenty-five percent (25%);

 

(ii)           the AccruedInvestments and the Accrued Welfare Benefits, which amounts will be payable inaccordance with the terms and conditions of the Investment Plans and theWelfare Plans, as applicable;

 

(iii)          a cash lump sumwithin thirty (30) days after the effective date of the Release equal to thesum of (1) the unvested portion of your Matching Contribution Account under theCompany’s Retirement Savings Plan, plus (2) the product of (x) two (2.0)multiplied times (y) the Matching Contribution you received for the calendaryear ended prior to the calendar year in which the Change in Control occurs;

 

(iv)          if you are entitledon the date of termination to coverage under the healthcare portion of theHealth Plan, continuation of such coverage for a period ending on the 180th dayfollowing the second (2nd)****anniversaryof the date of termination, at the active employee cost payable by you withrespect to those costs paid by you prior to such termination.  Provided, however, that this coverage willcount towards the depletion of any continued health care coverage rights thatyou and your dependents may have pursuant to COBRA.  Provided further, that you or your dependents’ rights tocontinued health care coverage pursuant to this Section will terminate at thetime you or your dependents become

 

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covered, asdescribed in COBRA, under another group health plan, and will also terminate asof the date the Company ceases to provide coverage to its senior executivesgenerally under any such Health Plan;

 

(v)           an amount equal toyour Pro Rata Bonus, which will be paid at such time as the Company pays itsother members of the Executive Officer Committee their annual cash incentivebonuses with respect to the calendar year in which termination occurs; and

 

(vi)          upon your requestand at the Company’s sole cost and expense, your enrollment in an outplacementprogram with a placement agency selected by the Company, and reasonablyacceptable to you, for a period of up to twelve months, commencing on theeffective date of the Release.

 

Notwithstandingthe provisions of any plan or agreement governing such an Award and withoutlimiting Section 2(c), (A) the Company will also continue to vestall of your outstanding Awards granted on or after a Change in Control thatwould have otherwise vested during the eighteen (18) month period beginning onthe date of termination and such Awards will continue to vest and, ifapplicable, be exercisable during such eighteen (18) month period and (B) allof your outstanding Awards that are vested immediately prior to the date oftermination shall be exercisable during the eighteen (18) month periodbeginning on the date of termination; provided, however, that nothing set forthherein shall result in an extension of the term of any Award beyond the term ofthe Award that would be applicable absent any termination of your employment;provided, further, however, that, in the case of a termination of youremployment pursuant to this Section 5(c),if the terms of the plan or agreement governing such Award are more favorableto you as to vesting or exercisability than the terms of this paragraph, thenthe more favorable term(s) of such Award agreement or plan (in lieu of thecorresponding less favorable term(s) in this paragraph) shall govern thevesting or exercisability, as the case may be, of such Award upon yourtermination.  Except as described inthis Section 5(c), in the event of yourtermination by us without Cause or due to a Non-Renewal election made by theCompany as provided in Section 3(e)(ii) or by you for Good Reason(taking into account in each such case the definition of Change in Control),you will forfeit all rights to any other compensation.

 

(d)           Non-Renewal Election by You.  If your employment is terminated due to aNon-Renewal Election by you, we will have no further obligations to you otherthan as set forth in Section 3(e)(iii), which also includes provisionfor the compensation and other benefits described in Section 4(b).  Except as described in Section 4(b)and Section 3(e)(iii), in the event of your termination due to aNon-Renewal election by you, you will forfeit all rights to any othercompensation.

 

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**6.             **Other Provisions Relating to Termination****.

 

(a)           Good Reason. Upon you learning of any event described in the definition of GoodReason, you may terminate your employment for Good Reason by giving a Notice ofTermination (describing, if applicable, the action required to cure the basisfor termination) to us within 60 days thereafter. If the event constitutingGood Reason may be cured, we will have the opportunity to cure any such eventfor a period of 60 days following receipt of your Notice of Termination.  If you do not give a Notice of Terminationto us within 60 days after learning of an event giving rise to Good Reason,then this Agreement will remain in effect and, without any further act on yourpart, you will have waived your right to terminate your employment hereunderfor Good Reason in respect of such event.

 

(b)           Cause. Upon the Company learning of any event described in the definition ofCause, we may terminate your employment for Cause by giving a Notice ofTermination (describing, if applicable, the action required to cure the basisfor termination) to you within 60 days thereafter. If we do not give you aNotice of Termination within 60 days after learning of an event giving rise toCause, then this Agreement will remain in effect and, without any further acton our part, we will have waived our right to terminate your employment forCause in respect of such event.

 

(c)           Full Settlement; Mitigation.  In no event will you be obligated to seekother employment or take any other action by way of mitigation of the amountspayable to you under any of the provisions of this Agreement and, except foryour right, if any, to continue your participation in the Health Plan asprovided herein, such amounts will not be reduced whether or not you obtainother employment.  The Company will notbe liable to you for any damages for breach of this Agreement arising out of thetermination of your employment other than for amounts payable under Sections3(e), 4 or 5, which amounts will be payable subject to theterms and conditions set forth therein. The Company will be entitled to seek damages from you for any breach of Section 7or 8 by you or for your criminal misconduct.

 

(d)           Release and Other Agreements.  Notwithstanding any other provision in thisAgreement to the contrary, as a condition to receiving the benefits describedin this Agreement, upon any termination of your employment hereunder you herebyagree to execute (and not revoke) a release in substantially the form attachedhereto as Exhibit A (the “Release”) andsuch other documents and agreements as required by the Company, in the form andpursuant to the procedures reasonably established by the Company.  For purposes of this Agreement, the Releasewill be considered to have been executed by you if it is signed by your legalrepresentative in the case of your legal incompetence or on behalf of yourestate in the case of your death.  Uponyour execution and delivery of the Release, the Company will also promptlyexecute and deliver the Release.

 

**7.             **Confidential Information****.

 

(a)           You acknowledge thatthe Company has trade, business and financial secrets and other confidentialand proprietary information regarding the Company and its

 

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business, inwhatever form, tangible or intangible (collectively, the “ConfidentialInformation”), and that during the course of your employment with theCompany you have received, will receive or will contribute to the ConfidentialInformation.  During the 180-day periodcommencing on the date of this Agreement and ending on the 180th day followingthe date of this Agreement, we will (a) disclose to you, or place you in aposition to have access to or develop, Confidential Information, (b) place youin a position to develop business goodwill on behalf of the Company, and/or (c)disclose or entrust business opportunities of the Company to you.  Confidential Information includes, to theextent confidential and proprietary to the Company, sales materials, technicalinformation, processes and compilations of information, records, specificationsand information concerning customers, prospective customers or vendors,customer and prospective customer lists, and information regarding methods ofdoing business.  However, ConfidentialInformation does not include your general knowledge of and experience in thereal estate business or your personal and professional relationships and itdoes not include information that (i) is obtained by you from a source otherthan the Company or its affiliates who is not under a duty of non-disclosure tothe Company or such affiliate or (ii) is in the public domain or is or becomesgenerally available to the public other than through disclosure by you inviolation of the provisions of this Agreement.

 

(b)           You are aware ofthose policies implemented by the Company to keep its Confidential Informationsecret.  You acknowledge that theConfidential Information has been developed or acquired by the Company throughthe expenditure of substantial time, effort and money and provides the Companywith an advantage over competitors who do not know or use such ConfidentialInformation.

 

(c)           During and followingyour employment by the Company, you will hold in confidence and will notdirectly or indirectly disclose, use, copy, make lists of, or make available toothers any Confidential Information except in the good faith performance ofyour duties to the Company or to the extent authorized in writing by the Boardor required by law or compelled by legal process.  You agree to use reasonable efforts to give the Company notice(accompanied by a copy of the subpoena, order or other process used to compeldisclosure) of any and all attempts to compel disclosure of any ConfidentialInformation, in such a manner so as to provide the Company with written noticewithin one (1) business day after you are informed that such disclosure isbeing or will be compelled.

 

(d)           You further agreenot to use any Confidential Information for the benefit of any person or entityother than the Company.

 

(e)           Upon termination ofyour employment, you agree that all Confidential Information and other files,documents, materials and other repositories containing information concerningthe Company or the business of the Company (including all copies thereof) inyour possession, custody or control, whether prepared by you or others, willremain with or be returned to the Company promptly (within twenty-four (24)hours) after the date of such termination.

 

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(f)            Notwithstandinganything herein to the contrary, you may disclose to any and all persons,without limitation of any kind, the U.S. federal income tax treatment and taxstructure of the transactions contemplated in this Agreement and all materialsof any kind (including opinions and other tax analyses) that are provided toyou relating to such tax treatment and tax structure.  For this purpose, “tax structure” is limited to facts relevant tothe U.S. federal income tax treatment of the transactions contemplated in thisAgreement and does not include information relating to the identity of theparties hereto.

 

**8.             **Non-Competition; Non-Solicitation****.

 

(a)           You acknowledge andagree that your use of Confidential Information and our lists of, andinformation concerning, customers and prospective customers in the conduct ofbusiness on behalf of a competitor of the Company would constitute unfaircompetition with the Company and would adversely affect the business goodwillof the Company.  Accordingly, as amaterial inducement to the Company to enter into this Agreement; to protect theCompany’s Confidential Information, including lists of, and information concerning,customers and prospective customers of the Company, that may be disclosed orentrusted to you (the disclosure of which by you in violation of this Agreementwould adversely affect the business goodwill of the Company), the businessgoodwill of the Company that may be developed in you and the businessopportunities that may be disclosed or entrusted to you by the Company; inconsideration for the compensation and other benefits payable hereunder to you,for the benefits to you of having access to Confidential Information, includinglists of, and information concerning, customers and prospective customers ofthe Company, during the Employment Period (the disclosure of which by you inviolation of this Agreement would adversely affect the business goodwill of theCompany); and for other good and valuable consideration, you hereby covenantand agree that, during the Term of Non-Competition, you will not directly orindirectly, individually or as an officer, director, manager, employee,shareholder, consultant, contractor, partner, member, joint venturer, agent,equity owner or in any capacity whatsoever:

 

(i)            own, engage in,manage, operate, join, control, be employed by, provide Competing Services to,or participate in the ownership, management, operation or control of orprovision of Competing Services to, a Competing Business operating in theGeographic Area;

 

(ii)           recruit, hire,assist in hiring, attempt to hire, or contact or solicit with respect to hiringany person who, at any time during the twelve (12) month period ending on thedate of termination, was an employee of the Company; provided, that you mayhire any person that served as an administrative or clerical employee at thetime their employment with the Company terminates so long as you do notrecruit, contact or solicit such employee;

 

(iii)          induce or attemptto induce any employee of the Company to terminate, or in any way interferewith, the relationship between the Company and any employee thereof; or

 

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(iv)          induce or attempt toinduce any customer, client, supplier, service provider, or other businessrelation of the Company in the Geographic Area to cease doing business with theCompany, or in any way interfere with the relationship between the Company andany such person.

 

Notwithstanding the foregoing, the Companyagrees that you may own less than one percent of the outstanding votingsecurities of any publicly traded company that is a Competing Business so longas you do not otherwise participate in such competing business in any wayprohibited by this Section.

 

(b)           You acknowledge thatthe geographic boundaries, scope of prohibited activities, and time duration ofthe preceding paragraphs in this Section are reasonable in nature and are nobroader than are necessary to maintain the goodwill of the Company and theconfidentiality of its Confidential Information and to protect the goodwill andother legitimate business interests of the Company, and also that theenforcement of such covenants would not cause you any undue hardship orunreasonably interfere with your ability to earn a livelihood.  If you violate the covenants andrestrictions in this Section and the Company brings legal action for injunctiveor other equitable relief, you agree that the Company will not be deprived ofthe benefit of the full period of the restrictive covenant, as a result of thetime involved in obtaining such relief. Accordingly, you agree that the provisions in this Section will have aduration determined pursuant to Subsection (a) above, computed from the datethe legal or equitable relief is granted.

 

(c)           As used in thisAgreement:

 

(i)            “CompetingBusiness” means a business that competes in any material respect with thebusiness, or any line of business, engaged in by the Company or any of itsSubsidiaries (A) at the time in question in respect of the Term ofNon-Competition occurring prior to the date of termination of your employmentand (B) as of the date of termination of your employment in respect of the Termof Non-Competition occurring on and after the date of termination of youremployment.

 

(ii)           “CompetingServices” means services that, if provided to a business other than aCompeting Business, would constitute the conduct of a Competing Business.

 

(iii)          “Geographic Area”means the geographic area in which the Company or any of its Subsidiariesengages in its respective business or any line of its business (A) at the timein question in respect of the Term of Non-Competition occurring prior to the dateof termination of your employment and (B) as of the date of termination of youremployment in respect of the Term of Non-Competition occurring on and after thedate of termination of your employment.

 

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(iv)          “Term ofNon-Competition” means the period of time beginning on the date hereof andcontinuing until 5:00 p.m., Dallas, Texas time, on:

 

(A)          the date oftermination if your employment is terminated (1) by the Company for any reasonother than Cause, (2) by you for Good Reason, (3) due to a Non-Renewal electionby you prior to a Change in Control or after the second anniversary of suchChange in Control, or (4) due to a Non-Renewal election made by the Company atany time, or

 

(B)           the date that istwelve (12) months after the date of termination if your employment isterminated (1) by the Company for Cause, (2) by you for any reason other thanGood Reason, or (3) due to any Non-Renewal election made by you after a Changein Control and on or before the second anniversary of such Change in Control.

 

(d)           If any court orarbitrator determines that any portion of this Section 8 is invalid orunenforceable, the remainder of this Section 8 will not thereby beaffected and will be given full effect without regard to the invalid orunenforceable provisions.  If any courtor arbitrator construes any of the provisions of this Section 8 to beinvalid or unenforceable because of the duration or scope of such provision,such court or arbitrator will be required to reduce the duration or scope ofsuch provision, to the minimum extent necessary so as to be enforceable, and toenforce such provision as so reduced.

 

**9.             **Gross-Up for Certain Taxes****.  If any of the payments or benefits due toyou under this Agreement would otherwise result in your liability for anyexcise taxes pursuant to Internal Revenue Code (“Code”) Section 4999 (“ExciseTax”) (whether at the time of payment or upon a later IRS audit), theCompany and you agree to use commercially reasonable efforts to restructure, ina manner reasonably acceptable to the Company and you, such payments orbenefits due to you so that such Excise Tax is eliminated or minimized to theextent permitted by applicable law; provided, however, that, without creatingany implication as to whether or not, under all the circumstances it would beunreasonable for you to refuse to defer receipt for a shorter period, theCompany agrees that, regardless of the circumstances, it shall not beunreasonable for you to refuse to defer receipt of a material portion of thepayments or benefits due to you under this Section 9 for more than sixmonths after the date on which such payments or benefits would otherwise becomedue to you under this Agreement.  If,despite the use of commercially reasonable efforts, the Company and you areunable either to agree on any such restructuring or to restructure the paymentsor benefits due to you under this Agreement to eliminate such Excise Tax, theCompany will reimburse you for the amount of such Excise Tax plus all federal,state and local taxes applicable to the Company’s payment of such Excise Taxes,including any additional taxes due under Section 4999 of the Code with respectto payments made pursuant to this provision. **Calculations forthese purposes will assume the highest marginal rate for individuals applicableat the time of calculation. **Theintent of this Section 9 is that the Company will pay you an additionalamount (the “Gross-Up Payment”) such that the net amount retained by youafter deduction of (i) any Excise Tax imposed on any such payment or benefit;and (ii) any excise tax, federal, state or local income, payroll, and/or othertaxes,

 

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imposed on the Gross-Up Payment, will equalthe amount of such payment or benefit reduced by all applicable taxes on suchamount other than the Excise Tax.

 

**10.          **Successors; Binding Agreement****.

 

(a)           This Agreement maynot be assigned by you other than by will or by the laws of descent anddistribution.  This Agreement will inureto the benefit of and be enforceable by your personal and legalrepresentatives, executors, administrators, heirs, distributees, devisees andlegatees. This Agreement will inure to the benefit of and be binding upon theCompany and its successors and assigns.

 

(b)           The Company willrequire any successor to all or substantially all of the business and/or assetsof the Company, by a written agreement in form and substance reasonablysatisfactory to you, to assume expressly and agree to perform this Agreement inthe same manner and to the same extent that the Company would be required toperform it if no such succession had taken place.  Failure of the Company to obtain such agreement prior to the effectivenessof any such succession will be considered grounds for you to terminate youremployment for Good Reason, and if you do so terminate your employment, youwill be entitled to compensation from the Company in the same amount and on thesame terms as you would be entitled to pursuant to Section 5 if youterminated your employment for Good Reason thereunder after, but before thesecond anniversary of, a Change in Control. As used in this Agreement and after any such succession, “Company” willmean the Company as hereinbefore defined and any successor and/or assigns whichassumes and agrees to perform this Agreement by operation of law, or otherwise.

 

**11.          **Miscellaneous****.

 

(a)           Construction.  This Agreement will be deemed drafted equally by both theparties.  Any presumption or principlethat the language is to be construed against any party will not apply.

 

(b)           Notices. For purposes of this Agreement, notices and all other communicationsprovided for in this Agreement will be in writing and will be deemed to havebeen duly given when (i) delivered personally; (ii) sent by facsimile orsimilar electronic device and confirmed; (iii) delivered by overnight express;or (iv) if sent by any other means, upon receipt.  Any notice or other communication shall be delivered to theaddress set forth below the Company’s or your signature hereto, as applicable,or to such other address as either party will have furnished to the other inwriting in accordance herewith.

 

(c)           Severability.  Except as otherwise provided in Section 8(d), if anyprovision of this Agreement is held to be illegal, invalid or unenforceable,such provision will be fully severable; this Agreement will be construed andenforced as if such illegal, invalid or unenforceable provision had nevercomprised a portion of this Agreement; and the remaining provisions of thisAgreement will remain in full force and effect and will not be affected by theillegal, invalid or unenforceable provision or by its severance from

 

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thisAgreement.  Furthermore, except asotherwise provided in Section 8(d), in lieu of such illegal,invalid or unenforceable provision there will be added automatically as part ofthis Agreement a provision as similar in terms to such illegal, invalid orunenforceable provision as may be possible and be legal, valid and enforceable.

 

(d)           Withholding. The Company may withhold from any amounts payable under this Agreementsuch Federal, state or local taxes as are required to be withheld pursuant toany applicable law or regulation.

 

(e)           No Waiver. Except as expressly set forth in this Agreement, no waiver by eitherparty at any time of any breach by the other party of, or compliance with, anycondition or provision of this Agreement to be performed by the other partywill be deemed a waiver of similar or dissimilar provisions or conditions atany time.

 

(f)            Equitable and Other Relief.  You acknowledge that money damages would beboth incalculable and an insufficient remedy for a breach of Section 7or 8 by you and that any such breach would cause the Company irreparableharm.  Accordingly, the Company, inaddition to any other remedies at law or in equity it may have, will beentitled, without the requirement of posting of bond or other security, toequitable relief, including injunctive relief and specific performance, inconnection with a breach of Section 7 or 8 by you.  The parties agree that the onlycircumstances in which disputes between them will not be subject exclusively toarbitration pursuant to the provisions in Section 11(h) are inconnection with a breach of Section 7 or 8 by you.  If the Company files a pleading with a courtseeking immediate injunctive relief and this pleading is challenged by you andinjunctive relief sought is not awarded, the Company will pay all of your costsand attorneys’ fees.  The partiesconsent to venue in Dallas County, Texas and to the exclusive jurisdiction ofcompetent state courts or federal courts in the state or district in DallasCounty, Texas for all litigation which may be brought, subject to therequirement for arbitration hereunder, with respect to the terms of, and thetransactions and relationships contemplated by, this Agreement.

 

(g)           Entire Agreement.** **The provisions ofthis Agreement constitute the entire and complete understanding and agreementbetween the parties with respect to the subject matter hereof.  The Company and you acknowledge that theIndemnification Agreement, dated January 6, 2004, by and between you and theCompany shall remain in full force and effect, without limitation of yourrights thereunder by the terms of this Agreement.

 

(h)           Arbitration. Except as otherwise provided in Section 11(f), in the event anyclaim, demand, cause of action, dispute, controversy or other matter inquestion (“Claim”) arises out of thisAgreement (or its termination) or your employment (or termination ofemployment) by the Company or its Subsidiaries, then, upon the written requestof you or us, such dispute or controversy will be submitted to bindingarbitration.  Any arbitration will beconducted in accordance with the Federal Arbitration Act (“FAA”) and, to the extent an issue is notaddressed by the FAA or the FAA does not apply, with the then-current NationalRules for the Resolution of Employment Disputes of the American ArbitrationAssociation (“AAA”) or other rules ofthe AAA as

 

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applicable tothe claims asserted.  The results ofarbitration will be binding and conclusive on the parties hereto.  All parties agree that venue for arbitrationwill be in Dallas County, Texas.  If youare the prevailing party, then you will be entitled to reimbursement by theCompany for reasonable attorneys fees, reasonable costs and other reasonableexpenses pertaining to the arbitration. All proceedings conducted pursuant to this Section 11(h) will bekept confidential by all parties.  **THE ARBITRATORSSHALL HAVE NO AUTHORITY TO AWARD PUNITIVE DAMAGES UNDER ANY CIRCUMSTANCES(WHETHER IT BE EXEMPLARY DAMAGES, TREBLE DAMAGES, OR ANY OTHER PENALTY ORPUNITIVE TYPE OF DAMAGES).  REGARDLESSOF WHETHER SUCH DAMAGES MAY BE AVAILABLE UNDER TEXAS LAW, YOU AND THE COMPANYEACH HEREBY WAIVE THE RIGHT, IF ANY, TO RECOVER PUNITIVE DAMAGES IN CONNECTIONWITH ANY CLAIMS.  YOU AND THE COMPANYACKNOWLEDGE THAT BY SIGNING THIS AGREEMENT YOU AND THE COMPANY ARE WAIVING ANYRIGHT THAT YOU OR THE COMPANY MAY HAVE TO A JURY TRIAL OR, OTHER THAN ASEXPRESSLY PROVIDED BY SECTION 11(f), A TRIAL BEFORE A JUDGE INCONNECTION WITH, OR RELATING TO, A CLAIM**.

 

(i)            Survival. Sections 3(e), 4, 5, 6, 7, 8, 9,10 and 11 of this Agreement will survive the termination of thisAgreement.

 

(j)            Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCEWITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTOF LAWS OF TEXAS OR ANY OTHER JURISDICTION, AND, WHERE APPLICABLE, THE LAWS OFTHE UNITED STATES.

 

(k)           Amendments. This Agreement may not be amended or modified at any time except by awritten instrument approved by the Board and executed by the Company and you.

 

(l)            Acknowledgement.  You acknowledge that you have read and understand this Agreement(including its legal effect), have had an opportunity to consult legal counselregarding it, have not acted in reliance upon any representations or promisesmade by the Company not contained herein, and have entered into this Agreementfreely.

 

(m)          Counterparts.  This Agreement may be executed (including by facsimiletransmission) in any number of counterparts.

 

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By signing andcountersigning this Agreement in the appropriate space set forth below, we andyou have agreed to be bound by the terms and conditions set forth herein,effective as of the date first written above.

 
|                                  | Sincerely,                 |
|---------------------------------------|----------------------------|
|                                  |                       |
|                                  | **TRAMMELL CROW COMPANY**, |
|                                  | a Delaware corporation     |
|                                  |                       |
|                                  | By:                        | /s/ ROBERT E. SULENTIC |
|                                  | Name:                      | Robert E. Sulentic |
|                                  | Title:                     | Chairman and CEO |
|                                  |                       |
|                                  | Address:                   | Trammell Crow Company |
|                                  |                       | 2001 Ross Avenue, Suite 3400 |
|                                  |                       | Dallas, Texas  75201 |
|                                  |                       | Attention:   General Counsel |
|                                  |                       | Telephone:   (214) 863-3000 |
|                                  |                       | Fax:   (214) 863-3125 |
|                                  |                       |
| ACKNOWLEDGED AND AGREED BY EXECUTIVE: |                       |
|                                  |                       |
| /s/ DIANE S. PADDISON                 |                       |   |
| Name:   Diane Paddison           |                       |
|                                  |                       |
| Address:                              | [XXXXXXXXXX]               |   |
|                                  | [XXXXXXXXXX]               |   |
|                                  | Telephone: [XXXXXXXXXX]    |   |
|                                  | Fax:                       |   |   |   |
|                                       |                            |  |  |  |  |  |

 

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