EX-10.16



 





Exhibit 10.16




AMENDED AND RESTATED EMPLOYMENT AGREEMENT




     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into as of the 6th day of November,
2006, between Developers Diversified Realty Corporation, an Ohio corporation (the “Company”), and
William H. Schafer (the “Executive”).



W I T N E S S E T H:




     WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed
by the Company, on the terms and subject to the conditions set forth herein; and



     WHEREAS, the Company and the Executive desire for this Amended and Restated Employment
Agreement to amend and supersede any prior Employment Agreements between the Company and the
Executive.



     NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties agree as
follows:



1. Employment.





	 	(a)	 	The Company hereby employs the Executive as its Executive Vice President and
Chief Financial Officer, and the Executive hereby accepts such employment, on the terms
and subject to the conditions hereinafter set forth.
	 
	 	(b)	 	During the term of this Employment Agreement, the Executive shall be and have
the titles of Executive Vice President and Chief Financial Officer and shall devote all
of his business time and all reasonable efforts to his employment and perform
diligently such duties as are customarily performed by Executive Vice Presidents and
Chief Financial Officers of companies similar in size to, and in a similar business as,
the Company, together with such other duties as may be reasonably requested from time
to time by the President or Chief Executive Officer of the Company or the Board of
Directors of the Company (the “Board”), which duties shall be consistent with his
positions previously set forth and as provided in Paragraph 2.





2. Term and Positions.





	 	(a)	 	The period of employment of the Executive by the Company shall, subject to
earlier termination as provided in this Employment Agreement, continue until December
31, 2006, with automatic one year renewals thereafter. Notwithstanding the foregoing,
this Employment Agreement may be terminated by the Company with “cause” (as hereinafter
defined) at any time and without cause upon not less than ninety (90) days prior
written notice to the Executive.
	 
	 	(b)	 	During the term of this Employment Agreement, the Executive shall be entitled
to serve as the Executive Vice President and Chief Financial Officer of the Company.
For service as an officer and employee of the Company, the Executive shall be entitled
to the full protection of the applicable indemnification provisions of the articles of
incorporation and code of regulations of the Company, as the same may be amended from
time to time,




 









 






	 	 	 	and the Indemnification Agreement dated June 30, 2004 between the Company and the
Executive (the “Indemnification Agreement”).
	 
	 	(c)	 	If:






	 	(i)	 	the Company materially changes the Executive’s duties and
responsibilities as set forth in Paragraphs 1(b) and 2(b) without his consent;
	 
	 	(ii)	 	the Executive’s place of employment or the principal executive
offices of the Company are located more than fifty (50) miles from the
geographical center of Cleveland, Ohio; or
	 
	 	(iii)	 	there occurs a material breach by the Company of any of its
obligations under this Employment Agreement, which breach has not been cured in
all material respects within thirty (30) days after the Executive gives notice
thereof to the Company;




then in any such event the Executive shall have the right to terminate his employment with the
Company, but such termination shall not be considered a voluntary resignation or termination of
such employment or of this Employment Agreement by the Executive but rather a discharge of the
Executive by the Company without “cause” (as defined in Paragraph 5(a)(ii)).





	 	(d)	 	The Executive shall be deemed not to have consented to any written proposal
calling for a material change in his duties and responsibilities unless the Executive
shall give written notice of his consent thereto to the Board within fifteen (15) days
after receipt of such written proposal. If the Executive shall not have given such
consent, the Company shall have the opportunity to withdraw such proposed material
change by written notice to the Executive given within ten (10) days after the end of
said fifteen (15) day period.
	 
	 	(e)	 	Notwithstanding anything in this Agreement to the contrary, if there shall
occur a “Change in Control” and a “Triggering Event” (as those terms are defined in the
Amended and Restated Change in Control Agreement, dated November 6, 2006, between the
Company and the Executive (the “Change in Control Agreement”)), payments to the
Executive will be governed by the Change in Control Agreement and the Executive shall
not be entitled to any additional benefits under this Employment Agreement except as to
that portion of any unpaid salary and other benefits accrued and earned by the
Executive hereunder up to and including the effective date of such termination.





3. Compensation.




          During the term of this Employment Agreement, the Company shall pay or provide, as the case
may be, to the Executive the compensation and other benefits and rights set forth in this Paragraph
3.





	 	(a)	 	The Company shall pay to the Executive a base salary payable in accordance with
the Company’s usual pay practices (and in any event no less frequently than monthly) of
not less than Two Hundred Seventy Thousand Dollars ($270,000) per annum, subject to
such increases as the Board may approve.
	 
	 	(b)	 	In addition to an annual base salary, if the Executive achieves the factors and
criteria for bonus payments hereinafter described for any fiscal year of the Company,
then the




Page 2









 






	 	 	 	Company shall pay to the Executive bonus compensation for such fiscal year, not
later than 75 days following the end of each fiscal year or, if applicable, the date
of termination of employment, as the case may be, prorated on a per diem basis for
partial fiscal years, determined and calculated in accordance with the percentages
set forth on Exhibit B attached hereto. The Company’s award of bonus compensation
to the Executive shall be determined by the factors and criteria, including the
financial performance of the Company and the performance by the Executive of his
duties hereunder, that may be established from time to time for the calculation of
bonus awards by the Executive Compensation Committee (the “Committee”) of the
Board.
	 
	 	(c)	 	The Company shall provide to the Executive such life, disability, medical,
hospitalization and dental insurance for the Executive, his spouse and eligible family
members as may be determined by the Board to be consistent with industry standards.
	 
	 	(d)	 	The Executive shall participate in all retirement and other benefit plans of
the Company generally available from time to time to employees of the Company and for
which the Executive qualifies under the terms thereof (and nothing in this Agreement
shall or shall be deemed to in any way affect the Executive’s rights and benefits
thereunder except as expressly provided herein).
	 
	 	(e)	 	The Executive shall be entitled to such periods of vacation and sick leave
allowance each year as are determined by the Chief Executive Officer or the President
of the Company in his reasonable and good faith discretion, which in any event shall be
not less than four weeks per year or as otherwise provided under the Company’s vacation
and sick leave policy for executive officers.
	 
	 	(f)	 	The Executive shall be entitled to participate in any equity or other employee
benefit plan that is generally available to senior executive officers, as distinguished
from general management, of the Company. The Executive’s participation in and benefits
under any such plan shall be on the terms and subject to the conditions specified in
the governing documents of the particular plan.
	 
	 	(g)	 	The Company shall reimburse the Executive or provide the Executive with an
expense allowance during the term of this Employment Agreement for travel,
entertainment and other expenses reasonably and necessarily incurred by the Executive
in connection with the Company’s business. The Executive shall furnish such
documentation with respect to reimbursement to be paid hereunder as the Company shall
reasonably request.
	 
	 	(h)	 	The Company shall pay to the Executive an automobile allowance of $500 per
month as may be adjusted from time to time. All expenses related to all automobiles
owned by the Executive shall be the sole responsibility of the Executive.
	 
	 	(i)	 	The Company shall name the Executive as a corporate member under the Company’s
membership at Barrington Country Club during the term of this Employment Agreement,
shall bear the cost of regular membership fees, assessments and dues incurred there
during the term of this Employment Agreement and shall reimburse the Executive for the
amount of any charge actually and reasonably incurred at Barrington Country Club in the
conduct of the Company’s business.




Page 3









 











4. Payment in the Event of Death or Disability.





	 	(a)	 	In the event of the Executive’s death or if the Executive becomes “disabled”
(as hereinafter defined) during the term of this Employment Agreement, the Company
shall pay to the Executive (or the successors and assigns of the Executive in the event
of his death) an amount equal to the sum of (i) the Executive’s then effective per
annum rate of salary, as determined under Paragraph 3(a), plus (ii) a bonus amount
prorated up to and including the effective date of termination and determined in
accordance with Paragraph 3(b) based on the aggregate amount accrued for bonuses for
the then current fiscal year as presented in the Company’s general ledger for the month
in which the Executive’s termination occurs, and shall continue the benefits described
in Paragraph 3(c) for the Executive (except in the case of death) and the Executive’s
family for a period of one (1) year.
	 
	 	(b)	 	The benefit to be paid pursuant to Paragraph 4(a) shall be paid within ninety
(90) days after the date of death or disability, as the case may be.
	 
	 	(c)	 	For purposes of this Employment Agreement, the Executive shall become
“disabled” only in the event of a permanent disability. Executive’s “disability” shall
be deemed to have occurred after one hundred twenty (120) days in the aggregate during
any consecutive twelve (12) month period, or after ninety (90) consecutive days, during
which one hundred twenty (120) or ninety (90) days, as the case may be, the Executive,
by reason of his physical or mental disability or illness, shall have been unable to
discharge his duties under this Employment Agreement. The date of disability shall be
such one hundred twentieth (120th) or ninetieth (90th) day, as
the case may be. In the event either the Company or the Executive, after receipt of
notice of the Executive’s disability from the other, dispute that the Executive’s
permanent disability shall have occurred, the Executive shall promptly submit to a
physical examination by the chief of medicine of any major accredited hospital in the
Cleveland, Ohio, area and, unless such physician shall issue his written statement to
the effect that in his opinion, based on his diagnosis, the Executive is capable of
resuming his employment and devoting full time and energy to discharging his duties
within thirty (30) days after the date of such statement, such permanent disability
shall be deemed to have occurred.





5. Termination.





	 	(a)	 	The employment of the Executive under this Employment Agreement, and the terms
hereof, may be terminated by the Company:






	 	(i)	 	on the death of the Executive or if the Executive becomes
disabled (as previously defined);
	 
	 	(ii)	 	for cause at any time by action of the Board. For purposes
hereof, the term “cause” shall mean:






	 	(A)	 	The Executive’s fraud, commission of a felony
or of an act or series of acts which result in material injury to the
business reputation of the Company, commission of an act or series of
repeated acts of dishonesty which are materially inimical to the best
interests of the Company, or the Executive’s willful and repeated
failure to perform his duties under this




Page 4









 






	 	 	 	Employment Agreement, which failure has not been cured within fifteen
(15) days after the Company gives notice thereof to the Executive; or
	 
	 	(B)	 	The Executive’s material breach of any
provision of this Employment Agreement, which breach has not been cured
in all substantial respects within ten (10) days after the Company
gives notice thereof to the Executive; or






	 	(iii)	 	without cause pursuant to written notice provided to the
Executive not less than ninety (90) days in advance of such termination date.






	 	 	 	The exercise by the Company of its rights of termination under this Paragraph 5
shall be the Company’s sole remedy if such right to terminate arises. Upon any
termination of this Employment Agreement, the Executive shall be deemed to have
resigned from all offices and directorships held by the Executive in the Company.
	 
	 	(b)	 	In the event of a termination claim by the Company to be for “cause” pursuant
to Paragraph 5(a)(ii), the Executive shall have the right to have the justification for
said termination determined by arbitration in Cleveland, Ohio. In order to exercise
such right, the Executive shall serve on the Company within thirty (30) days after
termination a written request for arbitration. The Company immediately shall request
the appointment of an arbitrator by the American Arbitration Association and thereafter
the question of “cause” shall be determined under the rules of the American Arbitration
Association, and the decision of the arbitrator shall be final and binding upon both
parties. The parties shall use all reasonable efforts to facilitate and expedite the
arbitration and shall act to cause the arbitration to be completed as promptly as
possible. During the pendency of the arbitration, the Executive shall continue to
receive all compensation and benefits to which the Executive is entitled hereunder, and
if at any time during the pendency of such arbitration the Company fails to pay and
provide all compensation and benefits to the Executive in a timely manner the Company
shall be deemed to have automatically waived whatever rights it then may have had to
terminate the Executive’s employment for cause. Expenses of the arbitration shall be
borne equally by the parties except as otherwise determined by the arbitrator.
	 
	 	(c)	 	In the event of termination for any of the reasons set forth in subparagraph
(a) of this Paragraph 5, except as otherwise provided in Paragraphs 3(d), 4(a) and
5(d), the Executive shall be entitled to no further compensation or other benefits
under this Employment Agreement, except as to that portion of any unpaid salary and
other benefits accrued and earned by the Executive hereunder up to and including the
effective date of such termination.
	 
	 	(d)	 	In the event of the termination by the Company of the Executive without “cause”
(other than as described in Paragraph 2(e)), or in the event of a termination by the
Executive for reasons set forth in Paragraph 2(c), the Company shall pay to the
Executive an amount equal to the sum of (i) the Executive’s then effective per annum
rate of salary, as determined under Paragraph 3(a), plus, (ii) a bonus amount prorated
up to and including the effective date of termination and determined in accordance with
Paragraph 3(b) based on the aggregate amount accrued for bonuses for the then current
fiscal year as presented in the Company’s general ledger for the month in which the
Executive’s termination occurs, and shall continue the benefits described in Paragraph
3(c) for a period of one (1) year.




Page 5









 






	 	(e)	 	Notwithstanding anything herein to the contrary, the Company shall not be
obligated to make any payment or provide any benefit pursuant to Paragraph 4(a) or
Paragraph 5(d) unless (i) the Executive executes a release of all current and future
claims, known or unknown, arising on or before the date of the release against the
Company and its subsidiaries and the directors, officers and affiliates of any of them,
in a form approved by the Company (or, in the case of death, the Executive’s estate
executes such release or such other documents as may be reasonably requested by the
Company) and (ii) the Executive (or the Executive’s estate) does not revoke any
required release during any applicable revocation period.





6. Covenants and Confidential Information.




	 	(a)	 	The Executive acknowledges the Company’s reliance and expectation of the
Executive’s continued commitment to performance of the Executive’s duties and
responsibilities during the term of this Employment Agreement. In light of such
reliance and expectation on the part of the Company, during the term of this Employment
Agreement and for a period of one (1) year thereafter (and, as to clause (ii) of this
subparagraph (a), at any time during and after the term of this Employment Agreement),
the Executive shall not, directly or indirectly do or suffer either of the following:






	 	(i)	 	own, manage, control or participate in the ownership,
management or control of, or be employed or engaged by or otherwise affiliated
or associated as a consultant, independent contractor or otherwise with, any
other corporation, partnership, proprietorship, firm, association or other
business entity engaged in the business of, or otherwise engage in the business
of, acquiring, owning, developing or managing commercial shopping centers;
provided, however, that the ownership of not more than one percent (1%) of any
class of publicly traded securities of any entity shall not be deemed a
violation of this covenant; or
	 
	 	(ii)	 	disclose, divulge, discuss, copy or otherwise use or suffer to
be used in any manner, in competition with, or contrary to the interests of,
the Company, any confidential information relating to the Company’s operations,
properties or otherwise to its particular business or other trade secrets of
the Company, it being acknowledged by the Executive that all such information
regarding the business of the Company compiled or obtained by, or furnished to,
the Executive while the Executive shall have been employed by or associated
with the Company is confidential information and the Company’s exclusive
property; provided, however, that the foregoing restrictions shall not apply to
the extent that such information (A) is clearly obtainable in the public
domain, (B) becomes obtainable in the public domain, except by reason of the
breach by the Executive of the terms hereof, (C) was not acquired by the
Executive in connection with the Executive’s employment or affiliation with the
Company, (D) was not acquired by the Executive from the Company or its
representatives or (E) is required to be disclosed by rule of law or by order
of a court or governmental body or agency.






	 	(b)	 	The Executive will not directly or indirectly during the term of this
Employment Agreement and for a period of one (1) year after the expiration of this
Employment Agreement or the termination of Executive’s employment for any reason,
solicit or induce or attempt to solicit or induce any employee(s) of the Company and/or
any subsidiary, affiliated or related companies to terminate their employment with the
Company and/or any subsidiary, affiliated or related companies.




Page 6









 






	 	(c)	 	The Executive agrees and understands that the remedy at law for any breach by
the Executive of this Paragraph 6 will be inadequate and that the damages following
from such breach are not readily susceptible to being measured in monetary terms.
Accordingly, it is acknowledged that, upon adequate proof of the Executive’s violation
of any legally enforceable provision of this Paragraph 6, the Company shall be entitled
to immediate injunctive relief and may obtain a temporary order restraining any
threatened or further breach. Nothing in this Paragraph 6 shall be deemed to limit the
Company’s remedies at law or in equity for any breach by the Executive of any of the
provisions of this Paragraph 6 which may be pursued or availed of by the Company.
	 
	 	(d)	 	The Executive has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon the Company under this
Paragraph 6, and hereby acknowledges and agrees that the same are reasonable in time
and territory, are designed to eliminate competition which otherwise would be unfair to
the Company, do not stifle the inherent skill and experience of the Executive, would
not operate as a bar to the Executive’s sole means of support, are fully required to
protect the legitimate interests of the Company and do not confer a benefit upon the
Company disproportionate to the detriment to the Executive.






	7.	 	Tax Adjustment Payments. If all or any portion of the amounts payable to the
Executive under this Employment Agreement or the Change in Control Agreement (including,
without limitation, the issuance of common shares of the Company; the granting or vesting of
restricted shares; and the granting, vesting, exercise or termination of options; but
excluding any units or awards granted or vested pursuant to any Performance Unit Agreement
between the Executive and the Company or any Outperformance Long-Term Incentive Plan Agreement
between the Executive and the Company) constitutes “excess parachute payments” within the
meaning of Section 280G of the Code that are subject to the excise tax imposed by Section 4999
of the Code (or any similar tax or assessment), the amounts payable to the Executive shall be
increased to the extent necessary to place the Executive in the same after-tax position as the
Executive would have been in had no such tax been imposed on any such amount paid or payable
to the Executive under this Employment Agreement, the Change in Control Agreement or any other
amount that the Executive may receive pursuant thereto (other than pursuant to a Performance
Unit Agreement or an Outperformance Long-Term Incentive Plan Agreement). The determination of
the amount of any such tax and the incremental payment required hereby in connection therewith
shall be made by the accounting firm employed by the Executive within thirty (30) calendar
days after such payment and said incremental payment shall be made within five (5) calendar
days after determination has been made. If, after the date upon which the payment required by
this Paragraph 7 has been made, it is determined (pursuant to final regulations or published
rulings of the Internal Revenue Service, final judgment of a court of competent jurisdiction,
Internal Revenue Service audit assessment or otherwise) that the amount of excise or other
similar taxes payable by the Executive is greater than the amount initially so determined,
then the Company shall pay the Executive an amount equal to the sum of: (i) such additional
excise or other taxes, plus (ii) any interest, fines and penalties resulting from such
underpayment, plus (iii) an amount necessary to reimburse the Executive for any
income, excise or other tax assessment payable by the Executive with respect to the receipt of
the amounts specified in (i) and (ii) above, and the reimbursement provided by this clause
(iii), in the manner described above in this Paragraph 7. Payment thereof shall be made
within five (5) calendar days after the date upon which such subsequent determination is made.




Page 7









 












	8.	 	Miscellaneous.






	 	(a)	 	The Executive represents and warrants that the Executive is not a party to any
agreement, contract or understanding, whether employment or otherwise, which would
restrict or prohibit the Executive from undertaking or performing employment in
accordance with the terms and conditions of this Employment Agreement.
	 
	 	(b)	 	During the term of this Employment Agreement and thereafter, the Executive will
provide reasonable assistance to the Company in litigation and regulatory matters that
relate to events that occurred during the Executive’s period of employment with the
Company and its predecessors, and will provide reasonable assistance to the Company
with matters relating to its corporate history from the period of the Executive’s
employment with it or its predecessors. The Executive will be entitled to
reimbursement of reasonable out-of-pocket travel or related costs and expenses relating
to any such cooperation or assistance that occurs following the term of employment.
	 
	 	(c)	 	The provisions of this Employment Agreement are severable and if any one or
more provision may be determined to be illegal or otherwise unenforceable, in whole or
in part, the remaining provision and any partially unenforceable provision to the
extent enforceable in any jurisdiction nevertheless shall be binding and enforceable.
	 
	 	(d)	 	The rights and obligations of the Company under this Employment Agreement shall
inure to the benefit of, and shall be binding on, the Company and its successors and
assigns, and the rights and obligations (other than obligations to perform services) of
the Executive under this Employment Agreement shall inure to the benefit of, and shall
be binding upon, the Executive and his heirs, personal representatives and assigns.
	 
	 	(e)	 	Any controversy or claim arising out of or relating to this Employment
Agreement, or the breach thereof, shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association then pertaining in the City of
Cleveland, Ohio, and judgment upon the award rendered by the arbitrator or arbitrators
may be entered in any court having jurisdiction thereof. The arbitrator or arbitrators
shall be deemed to possess the powers to issue mandatory orders and restraining orders
in connection with such arbitration; provided, however, that nothing in this Paragraph
8(e) shall be construed so as to deny the Company the right and power to seek and
obtain injunctive relief in a court of equity for any breach or threatened breach by
the Executive of any of the covenants contained in Paragraph 6 hereof.
	 
	 	(f)	 	Any notice to be given under this Employment Agreement shall be personally
delivered in writing or shall have been deemed duly given when received after it is
posted in the United States mail, postage prepaid, registered or certified, return
receipt requested, and if mailed to the Company, shall be addressed to its principal
place of business, attention: President, and if mailed to the Executive, shall be
addressed to the Executive at his home address last known on the records of the
Company, or at such other address or addresses as either the Company or the Executive
may hereafter designate in writing to the other.
	 
	 	(g)	 	The failure of either party to enforce any provision or provisions of this
Employment Agreement shall not in any way be construed as a waiver of any such
provision or provisions as to any future violations thereof, nor prevent that party
thereafter from enforcing each and every other provision of this Employment Agreement.
The rights granted the parties herein are cumulative and the waiver of any single
remedy shall not




Page 8









 






	 	 	 	constitute a waiver of such party’s right to assert all other legal remedies
available to it under the circumstances.
	 
	 	(h)	 	This Employment Agreement supersedes all prior agreements and understandings
between the parties and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing and signed by the
party against whom the same is sought to be enforced.
	 
	 	(i)	 	This Employment Agreement shall be governed by and construed according to the
laws of the State of Ohio.
	 
	 	(j)	 	Captions and paragraph headings used herein are for convenience and are not a
part of this Employment Agreement and shall not be used in construing it.
	 
	 	(k)	 	Where necessary or appropriate to the meaning hereof, the singular and plural
shall be deemed to include each other, and the masculine, feminine and neuter shall be
deemed to include each other.





[Signatures on the following page.]




Page 9









 








     IN WITNESS WHEREOF, the parties have executed this Amended and Restated Employment Agreement
on the day and year first set forth herein.



	 	 	 	 	 
	 	DEVELOPERS DIVERSIFIED REALTY CORPORATION

 	 
	 	By:  	/s/ Nan R. Zieleniec
 	 
	 	 	Nan R. Zieleniec, 	 
	 	 	Senior Vice President of Human Resources 	 
	 
	 	 	/s/ William H. Schafer
 	 
	 	 	William H. Schafer 	 
	 	 	 



 









 








EXHIBIT B




INCENTIVE OPPORTUNITY




Bonus As

% of Salary




	 	 	 	 	 	 	 	 	 
	Threshold	 	Target	 	Maximum
	 
	20%
	 	 	40	%	 	 	60	%