Document:

Exhibit 10.5

 

JOHN A. KITE

FORM OF EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of
                      ,
2004, by and between KITE REALTY GROUP TRUST, a Maryland real estate investment
trust (the “Company”), and John A.
Kite (the “Executive”).

 

WHEREAS, the Company and Kite Realty Group,
L.P., the general partner of which is the Company (“Kite Realty”), are engaging in various related transactions
pursuant to which, among other things, (i) Kite Realty will acquire interests
in various entities that own or lease real estate properties in which certain
persons affiliated with the Company, including the Executive, have interests,
(ii) the Company will acquire interests in certain service businesses currently
owned by persons affiliated with the Company, including certain businesses of
the Executive (the “Service Companies”)
and (iii) the Company will effect an initial public offering of its common
shares and contribute the proceeds therefrom for a like number of units of
partnership interest in Kite Realty (the “Kite IPO,”
and together with the other transactions described above, the “Kite IPO Transactions”);

 

WHEREAS, the Executive is currently employed
by one of the Service Companies, KMI Realty Advisors, Inc. (“KMI Realty Advisors”), or an affiliate of
KMI Realty Advisors; and

 

WHEREAS, in connection with the Kite IPO
Transactions, the Company wishes to offer employment to the Executive, and the
Executive wishes to accept such offer, on the terms set forth below.

 

Accordingly, the parties hereto agree as
follows:

 

1.                                       Term.  The Company hereby employs the Executive, and
the Executive hereby accepts such employment for an initial term commencing as
of the date hereof and ending on December 31, 2007, unless sooner terminated in
accordance with the provisions of Section 4 or Section 5 (the period during
which the Executive is employed hereunder being hereinafter referred to as the
“Term”).  The Term shall be subject to automatic
one-year renewals unless either party hereto notifies the other, in accordance
with Section 7.4, of non-renewal at least ninety (90) days prior to the end of
any such Term.  Notwithstanding the
employment of the Executive by the Company, the Company shall be entitled to
pay the Executive from the payroll of any subsidiary of the Company.

 

2.                                       Duties.  The Executive, in his capacity as President
and Chief Executive Officer shall faithfully perform for the Company the duties
of said office and shall perform such other duties of an executive, managerial
or administrative nature as shall be specified and designated from time to time
by the Board of Trustees of the Company (the “Board”)
(including the performance of services for, and serving on the Board of
Directors of, any subsidiary or affiliate of the Company without any additional
compensation).  The Executive shall
devote substantially all of the Executive’s business time and effort to the
performance of the Executive’s duties hereunder,

 

 

provided that in no event shall
this sentence prohibit the Executive from performing personal and charitable
activities and any other activities approved by the Board, so long as such
activities do not materially and adversely interfere with the Executive’s
duties for the Company.  The Board may
delegate its authority to take any action under this Agreement to the
Compensation Committee of the Board of Trustees (the “Compensation Committee”).

 

3.                                       Compensation.

 

3.1                                 Salary.  The Company shall pay the Executive during
the Term a base salary at the rate of $325,000 per annum (the “Annual Salary”), in accordance with the
customary payroll practices of the Company applicable to senior executives
generally.  The Annual Salary may be
increased annually by an amount as may be approved by the Board or the Compensation
Committee, and, upon such increase, the increased amount shall thereafter be
deemed to be the Annual Salary for purposes of this Agreement.

 

3.2                                 Bonus.  The Executive will be eligible to participate
in the Company’s annual bonus plan (the “Bonus
Plan”), the terms of which will be established by the Compensation
Committee.  The Executive may be awarded
such restricted shares, share options and other equity-based awards under the
Company’s equity compensation plan (“Equity
Awards”) as the Compensation Committee determines to be appropriate.

 

3.3                                 Benefits
– In General.  The Executive shall be
permitted during the Term to participate in any group life, hospitalization or
disability insurance plans, health programs, pension and profit sharing plans
and similar benefits that may be available to other senior executives of the
Company generally, on the same terms as may be applicable to such other
executives, in each case to the extent that the Executive is eligible under the
terms of such plans or programs.  During
the Term, the Company shall maintain customary liability insurance for trustees
and officers and list the Executive as a covered officer.

 

With respect to each such benefit plan and
program, service with KMI Realty Advisors or any of its affiliates (as
applicable) shall be included for purposes of determining eligibility to
participate (including waiting periods, and without being subject to any entry
date requirement after the waiting period has been satisfied), vesting (as
applicable) and entitlement to benefits. The medical plan or plans maintained
by the Company shall waive all limitations as to pre-existing conditions,
exclusions and waiting periods with respect to participation and coverage
requirements. With respect to vacation benefits provided by the Company, the vacation
benefit of Executive shall include all hours of accrued but unused vacation and
sick time hours, respectively, with KMI Realty Advisors or any of its
affiliates.

 

3.4                                 Vacation.  During the Term, the Executive shall be
entitled to vacation of four (4) weeks per year.

 

3.5                                 Automobile.  During the Term, the Company will provide the
Executive an allowance of $9,000 per year for the use of an automobile
(including the payment of vehicle insurance). 
At the option of the Company, in lieu of providing such allowance, the
Company will provide the Executive with an automobile of suitable standard to
the Executive’s position.

 

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3.6                                 Expenses.  The Company shall pay or reimburse the
Executive for all ordinary and reasonable out-of-pocket expenses actually
incurred (and, in the case of reimbursement, paid) by the Executive during the
Term in the performance of the Executive’s services under this Agreement;
provided that the Executive submits such expenses in accordance with the
policies applicable to senior executives of the Company generally.

 

4.                                       Termination
upon Death or Disability.  If the
Executive dies during the Term, the obligations of the Company to or with
respect to the Executive shall terminate in their entirety except as otherwise
provided under this Section 4.  If the
Executive becomes eligible for disability benefits under the Company’s
long-term disability plans and arrangements (or, if none apply, would have been
so eligible under the most recent plan or arrangement), the Company shall have
the right, to the extent permitted by law, to terminate the employment of the
Executive upon notice in writing to the Executive and such termination in and
of itself shall not be, nor shall it be deemed to be, a breach of this
Agreement; provided, that, the Company will have no right to terminate the
Executive’s employment if, in the opinion of a qualified physician reasonably
acceptable to the Company, it is reasonably certain that the Executive will be
able to resume the Executive’s duties on a regular full-time basis within 90
days of the date the Executive receives notice of such termination.

 

Upon death or other termination of employment
by virtue of disability (i) the Executive (or the Executive’s estate or beneficiaries
in the case of the death of the Executive) shall have no right to receive any
compensation or benefit hereunder on and after the Effective Date of the
Termination other than Annual Salary earned and accrued under this Agreement
prior to the Effective Date of the Termination, any bonus for the prior year
not yet paid, and other benefits, including payment for accrued but unused
vacation, earned and accrued under this Agreement prior to the Effective Date
of the Termination (and reimbursement under this Agreement for expenses
incurred but not paid prior to the Effective Date of the Termination) and an
amount equal to the product of (x) the Executive’s target annual bonus for the
fiscal year of the Executive’s death or disability and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Effective Date of the Termination, and the denominator of which is 365; (ii)
all Equity Awards held by the Executive shall become fully vested and
exercisable; and (iii) this Agreement shall otherwise terminate upon the
Effective Date of the Termination and there shall be no further rights with
respect to the Executive hereunder (except as provided in Section 7.13).  For purposes of this Section 4, the “Effective Date of the Termination” shall mean the date of
death or the date on which a notice of termination by virtue of disability is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such notice of termination.

 

For the avoidance of doubt, the Executive
acknowledges and agrees that the payments set forth in this Section 4
constitute liquidated damages for termination of his employment during the Term
upon death or by virtue of disability.

 

5.                                       Other
Terminations of Employment.

 

5.1                                 Termination
for Cause; Termination of Employment by the Executive Without Good Reason.

 

(a)                                  For
purposes of this Agreement, “Cause”
shall mean:

 

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(i)                                     the
Executive’s conviction for (or pleading nolo contendere to) any felony;

 

(ii)                                  the
Executive’s commission of an act of fraud, theft or dishonesty related to the
business of the Company or its affiliates or the performance of the Executive’s
duties hereunder;

 

(iii)                               the
willful and continuing failure or habitual neglect by the Executive to perform
the Executive’s duties hereunder;

 

(iv)                              any
material violation by the Executive of the covenants contained in Section 6 or
that certain Non-Competition Agreement dated as of the date hereof between the
Executive and the Company (the “Non-Competition
Agreement”); or

 

(v)                                 the
Executive’s willful and continuing material breach of this Agreement.

 

For purposes of this Section 5.1, no act, or failure to act, by
Executive shall be considered “willful” unless committed in bad faith and
without a reasonable belief that the act or omission was in the best interests
of the Company or its subsidiaries. 
Notwithstanding the foregoing, if there exists (without regard to this
sentence) an event or condition that constitutes Cause under clause (iii), (iv)
or (v) above, the Executive shall have 30 days from the date written notice is
given by the Company of such event or condition to cure such event or condition
and, if the Executive does so, such event or condition shall not constitute
Cause hereunder.

 

(b)                                 For
purposes of this Agreement, “Good Reason”
shall mean, unless otherwise consented to by the Executive:

 

(i)                                     the
material reduction of the Executive’s authority, duties and responsibilities,
or the assignment to the Executive of duties materially and adversely
inconsistent with the Executive’s position or positions with the Company and
its subsidiaries;

 

(ii)                                  a
reduction in Annual Salary of the Executive except in connection with a
reduction in compensation generally applicable to senior management employees
of the Company;

 

(iii)                               the
failure by the Company to obtain an agreement in form and substance reasonably
satisfactory to the Executive from any successor to the business of the Company
to assume and agree to perform this Agreement;

 

(iv)                              a
Change in Control (for purposes of this Agreement, “Change in Control” shall mean:

 

(A) the dissolution or
liquidation of the Company, (B) the merger, consolidation, or reorganization of
the Company with one or more other entities in which the Company is not the
surviving entity or 

 

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immediately following which the
persons or entities who were beneficial owners (as determined pursuant to Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) of voting securities of the Company immediately prior thereto cease to
beneficially own more than fifty percent (50%) of the voting securities of the
surviving entity immediately thereafter, (C) a sale of all or substantially all
of the assets of the Company to another person or entity, (D) any transaction
(including without limitation a merger or reorganization in which the Company
is the surviving entity) that results in any person or entity or “group”
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (other
than persons who are shareholders or affiliates immediately prior to the
transaction) owning thirty percent (30%) or more of the combined voting power
of all classes of shares of the Company, or (E) individuals who,
as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual becoming a
trustee subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the trustees then comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for trustee, without written objection to such
nomination) shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of trustees or other
actual or threatened solicitation of proxies or contests by or on behalf of a
person other than the Board);

 

(v)                                 a
requirement by the Company that the Executive’s work location be moved more
than fifty (50) miles from the Company’s principal place of business in
Indianapolis, Indiana; or

 

(vi)                              the
Company’s material and willful breach of this Agreement.

 

Notwithstanding the foregoing, if there exists (without regard to this
sentence) an event or condition that constitutes Good Reason under clause (i),
(ii), (v) or (vi) above, the Company shall have 30 days from the date on which
the Executive gives the written notice thereof to cure such event or condition
and, if the Company does so, such event or condition shall not constitute Good
Reason hereunder.  Further, an event or
condition shall cease to constitute Good Reason one (1) year after the event or
condition first occurs.

 

(c)                                  The
Company may terminate the Executive’s employment hereunder for Cause and such
termination in and of itself shall not be, nor shall it be deemed to be,

 

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a breach of this
Agreement.  If the Company terminates the
Executive for Cause, (i) the Executive shall have no right to receive any
compensation or benefit hereunder on and after the Effective Date of the
Termination other than Annual Salary and other benefits, including payment for
accrued but unused vacation (but excluding any bonuses except as provided in
the Bonus Plan) earned and accrued under this Agreement prior to the Effective
Date of the Termination (and reimbursement under this Agreement for expenses
incurred but not paid prior to the Effective Date of the Termination); and (ii)
this Agreement shall otherwise terminate upon the Effective Date of the
Termination and the Executive shall have no further rights hereunder (except as
provided in Section 7.13).  For purposes
of this Section 5.1(c), the “Effective Date
of the Termination” shall mean the date on which a notice of
termination is given or any later date (within thirty (30) days after the
giving of such notice) set forth in such notice of termination.

 

(d)                                 The
Executive may terminate his employment without Good Reason.  If the Executive terminates the Executive’s
employment with the Company without Good Reason: (i) the Executive shall have
no right to receive any compensation or benefit hereunder on and after the
Effective Date of the Termination other than Annual Salary and other benefits,
including payment for accrued but unused vacation (but excluding any bonuses
except as provided in the Bonus Plan) earned and accrued under this Agreement
prior to the Effective Date of the Termination (and reimbursement under this
Agreement for expenses incurred but not paid prior to the Effective Date of the
Termination); and (ii) this Agreement shall otherwise terminate upon the
Effective Date of the Termination and the Executive shall have no further rights
hereunder (except as provided in Section 7.13). 
For purposes of this Section 5.1(d), the “Effective Date of the Termination” shall mean the date on
which a notice of termination is given or any later date (within thirty (30)
days after the giving of such notice) set forth in such notice of termination.

 

(e)                                  In the event the
Company elects not to renew this Agreement as contemplated in Section 1 above,
the Executive shall receive (i) a cash payment equal to one (1) times the sum
of: (x) the Executive’s Annual Salary in effect on the day of expiration of the
Term, and (y) the average bonus actually paid to the Executive with respect to
the prior three (3) calendar years, payable no later than 30 days after the day
of expiration of the Term; and (ii) all Equity Awards held by the Executive
shall become fully vested and exercisable.

 

5.2                                 Termination
Without Cause; Termination for Good Reason. 
The Company may terminate the Executive’s employment at any time without
Cause, for any reason or no reason and the Executive may terminate the
Executive’s employment with the Company for Good Reason.  If the Company or the Executive terminates
the Executive’s employment and such termination is not described in Section 4
or Section 5.1, (i) the Executive shall have no right to receive any
compensation or benefit hereunder on and after the Effective Date of the
Termination other than Annual Salary earned and accrued under this Agreement
prior to the Effective Date of the Termination, any bonus for the prior year
not yet paid, and other benefits, including payment for accrued but unused
vacation, earned and accrued under this Agreement prior to the Effective Date
of the Termination (and reimbursement under this Agreement for expenses
incurred but not paid prior to the Effective Date of the Termination) and an
amount equal to the product of (x) the Executive’s target annual bonus for the
fiscal year of the Executive’s termination of employment and (y) a fraction,
the numerator of which is the number of days in the current fiscal year through
the Effective Date of the Termination, and the denominator of which is 365;
(ii) the Executive shall receive a cash payment equal to the Severance Payment
payable no later than 30 days after the

 

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Effective Date of the
Termination; (iii) for one (1) year after the Effective Date of the
Termination, the Company shall continue medical, prescription and dental
benefits to the Executive and/or the Executive’s family at least equal to those
which would have been provided to them in accordance with the welfare benefit
plans, practices, policies and programs provided by the Company to the extent
applicable generally to other peer employees of the Company and its affiliated
companies, as if the Executive’s employment had not been terminated; provided,
however, that if the Executive becomes reemployed with another employer and is
eligible to receive medical, prescription and dental benefits under another
employer provided plan, the medical, prescription and dental benefits described
herein shall be secondary to those provided under such other plan during such
applicable period of eligibility; (iv) all Equity Awards held by the Executive
shall become fully vested and exercisable; and (v) this Agreement shall
otherwise terminate upon the Effective Date of the Termination and the
Executive shall have no further rights hereunder (except as provided in Section
7.13).  The “Severance Payment” means three (3) times the sum of: (i) the
Executive’s Annual Salary in effect on the day of termination and (ii) the
Executive’s Average Annual Bonus.  The
Executive’s “Average Annual Bonus”
means the average bonus actually paid to the Executive with respect to the
prior three (3) calendar years.  For
purposes of this Section 5.2, the “Effective
Date of the Termination” shall mean the date on which a notice of
termination is given or any later date (within thirty (30) days after the
giving of such notice) set forth in such notice of termination, or in the case
of termination of employment by the Executive for Good Reason, the date of
termination specified in such Executive’s notice of termination..

 

5.3                                 Nature
of Payments.  For the avoidance of
doubt, the Executive acknowledges and agrees that the payments set forth in this
Section 5 constitute liquidated damages for termination of his employment
during the Term.

 

6.                                       Confidential
and Proprietary Information.

 

6.1                                 Confidential
Information.  The Executive shall
keep secret and retain in strictest confidence, and shall not use for his
personal benefit or the benefit of others or directly or indirectly disclose,
except as may be required or appropriate in connection with his carrying out
his duties under this Agreement, all confidential information, knowledge or
data relating to the Company or any of its affiliates, or to the Company’s or
any such affiliate’s respective businesses and investments (including
confidential information of others that has come into the possession of the
Company or any such affiliate), learned by the Executive heretofore or
hereafter directly or indirectly from the Company or any of its affiliates and
which is not generally available lawfully and without breach of confidential or
other fiduciary obligation to the general public without restriction (the “Confidential Company Information”), except
with the Company’s express written consent or as may otherwise be required by
law or any legal process.

 

6.2                                 Return
of Documents; Rights to Products. 
All memoranda, notes, lists, records, property and any other tangible
product and documents (and all copies thereof) made, produced or compiled by
the Executive or made available to the Executive concerning the businesses and
investments of the Company and its affiliates shall be the Company’s property
and shall be delivered to the Company at any time on request.  The Executive shall assign to the Company all
rights to trade secrets and other products relating to the Company’s business
developed by him alone or in conjunction with others at any time while employed
by the Company.

 

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6.3                                 Rights
and Remedies upon Breach.  The
Executive acknowledges and agrees that any breach by him of any of the
provisions of this Section 6 (the “RestrictiveCovenants”) would result in irreparable
injury and damage for which money damages would not provide an adequate
remedy.  Therefore, if the Executive
breaches, or threatens to commit a breach of, any of the Restrictive Covenants,
the Company and its affiliates shall have the right and remedy to have the
Restrictive Covenants specifically enforced (without posting bond and without
the need to prove damages) by any court having equity jurisdiction, including,
without limitation, the right to an entry against the Executive of restraining
orders and injunctions (preliminary, mandatory, temporary and permanent)
against violations, threatened or actual, and whether or not then continuing,
of such covenants.  This right and remedy
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company and its affiliates under law or in equity (including,
without limitation, the recovery of damages). 
The existence of any claim or cause of action by the Executive, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement of the Restrictive Covenants.

 

7.                                       Other
Provisions.

 

7.1                                 Severability.  The Executive acknowledges and agrees that
the Executive has had an opportunity to seek advice of counsel in connection
with this Agreement.  If it is determined
that any of the provisions of this Agreement, or any part thereof, is invalid
or unenforceable, the remainder of the provisions of this Agreement shall not
thereby be affected and shall be given full affect, without regard to the invalid
portions.

 

7.2                                 Enforceability;
Jurisdictions.  The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
the Restrictive Covenants.  If the courts
of any one or more of such jurisdictions hold the Restrictive Covenants wholly
unenforceable by reason of breadth of scope or otherwise it is the intention of
the Company and the Executive that such determination not bar or in any way
affect the Company’s right, or the right of any of its affiliates, to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction’s being, for this purpose,
severable, diverse and independent covenants, subject, where appropriate, to
the doctrine of res judicata.

 

7.3                                 Attorneys’ Fees.  In the event of any legal proceeding relating
to this Agreement or any term or provision thereof, the losing party shall be
responsible to pay or reimburse the prevailing party for all reasonable
attorneys’ fees incurred by the prevailing party in connection with such proceeding;
provided, however, the Executive shall not be required to pay or reimburse the
Company unless the claim or defense asserted by the Executive was unreasonable.

 

7.4                                 Notices.  All notices, requests, demands, claims, and
other communications hereunder shall be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly delivered (i) two business
days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, (ii) when received if it is sent by facsimile
communication during normal business hours on a business day or one business
day after it is sent by facsimile and received if sent other than during
business hours on a business day, (iii) one

 

8

 

business day after it is sent
via a reputable overnight courier service, charges prepaid, or (iv) when
received if it is delivered by hand, in each case to the intended recipient as
set forth below:

 

(i)                                     If
to the Company, to:

Kite Realty Group Trust

30 S. Meridian Street

Suite 1100

Indianapolis, IN  46204

Attention:

Facsimile: 
(317) 577-5605

 

(ii)                                  If
to the Executive, to:

 

John A. Kite

 

 

 

with copies in either case (which shall not
constitute

notice) to:

 

Hogan & Hartson L.L.P.

555 13th Street, NW

Washington, DC 20004

Attention:  William L. Neff, Esq.

Facsimile:  (202) 637-5910

 

and

 

Barnes & Thornburg LLP

11 South Meridian

Indianapolis, IN 46204

Attention: Robert D. MacGill, Esq.

Facsimile: (317) 231-7433

 

Any such person may by notice given in accordance with this Section to
the other parties hereto designate another address or person for receipt by
such person of notices hereunder.

 

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7.5                                 Entire Agreement.  This Agreement, together with the exhibits
hereto and the Noncompetition Agreement, contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with the Company or its subsidiaries (or any predecessor
of either).

 

7.6                                 Waivers and
Amendments.  This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms hereof may be
waived, only by a written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. 
No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege nor any single or
partial exercise of any such right, power or privilege, preclude any other or
further exercise thereof or the exercise of any other such right, power or
privilege.

 

7.7                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

 

7.8                                 Assignment.  This Agreement, and the Executive’s rights
and obligations hereunder, may not be assigned by the Executive; any purported
assignment by the Executive in violation hereof shall be null and void.  In the event of any Change in Control, the
Company may assign this Agreement and its rights hereunder.

 

7.9                                 Withholding.  The Company shall be entitled to withhold
from any payments or deemed payments any amount of withholding required by
law.  No other taxes, fees, impositions,
duties or other charges or offsets of any kind shall be deducted or withheld
from amounts payable hereunder, unless otherwise required by law.

 

7.10                           No Duty to Mitigate.  The Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor will any payments hereunder be
subject to offset in the event the Executive does mitigate.

 

7.11                           Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors, permitted
assigns, heirs, executors and legal representatives.

 

7.12                           Counterparts.  This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts together shall constitute one
and the same instrument.  Each
counterpart may consist of two copies hereof each signed by one of the parties
hereto.

 

7.13                           Survival.  Anything contained in this Agreement to the
contrary notwithstanding, the provisions of Sections 6 and 7 (to the extent
necessary to effectuate the survival of Sections 6 and 7) shall survive
termination of this Agreement and any termination of the Executive’s employment
hereunder.

 

7.14                           Existing Agreements.  Executive represents to the Company that the
Executive is not subject or a party to any employment or consulting agreement,
non-competition

 

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covenant or other agreement,
covenant or understanding which might prohibit the Executive from executing
this Agreement or limit the Executive’s ability to fulfill the Executive’s
responsibilities hereunder.

 

7.15                           Headings.  The headings in this Agreement are for
reference only and shall not affect the interpretation of this Agreement.

 

7.16                           Parachute Provisions.  If any amount payable to or other benefit
receivable by the Executive pursuant to this Agreement is deemed to constitute
a Parachute Payment (as defined below), alone or when added to any other amount
payable or paid to or other benefit receivable or received by the Executive
which is deemed to constitute a Parachute Payment (whether or not under an
existing plan, arrangement or other agreement), and would result in the
imposition on the Executive of an excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended, then, in addition to any other benefits to
which the Executive is entitled under this Agreement, the Executive shall be paid
by the Company an amount in cash equal to the sum of the excise taxes payable
by the Executive by reason of receiving Parachute Payments plus the amount
necessary to put the Executive in the same after-tax position (taking into
account any and all applicable federal, state and local excise, income or other
taxes at the highest applicable rates on such Parachute Payments and on any
payments under this Section 7.17 ) as if no excise taxes had been imposed with
respect to Parachute Payments.  The
amount of any payment under this Section 7.17 shall be computed by a certified
public accounting firm mutually and reasonably acceptable to the Executive and
the Company, the computation expenses of which shall be paid by the
Company.  “Parachute Payment” shall mean any payment deemed to constitute
a “parachute payment” as defined in Section 280G of the Internal Revenue Code
of 1986, as amended.

 

7.17                           Certain Definitions.  For purposes of this Agreement:

 

(a)                                  an
“affiliate” of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person, and includes subsidiaries.  Notwithstanding the foregoing, the persons
listed on Exhibit A, as such Exhibit A is updated from time to
time by the mutual agreement of the parties, shall not be affiliates of the
Company.

 

(b)                                 A
“business day” means the period from 9:00 am to 5:00 pm on any weekday that is
not a banking holiday in New York City, New York.

 

(c)                                  A
“subsidiary” of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests or no board of
directors or other governing body, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person.

 

11

 

IN WITNESS WHEREOF, the parties hereto have
signed their names as of the day and year first above written.

 

	
   

  	
  KITE REALTY
  GROUP TRUST

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JOHN A. KITE

  
					

 

12

 

EXHIBITS TO THE EMPLOYMENT AGREEMENT*

 

 

Exhibit A                                               Exclusion
From Affiliates

 

*           The registrant agrees
to furnish, supplementally, a copy of omitted Exhibit A upon request.

 

13Exhibit 10.6

 

THOMAS K. McGOWAN

FORM OF EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of
                      ,
2004, by and between KITE REALTY GROUP TRUST, a Maryland real estate investment
trust (the “Company”), and Thomas
K. McGowan (the “Executive”).

 

WHEREAS, the Company and Kite Realty Group,
L.P., the general partner of which is the Company (“Kite Realty”), are engaging in various related transactions
pursuant to which, among other things, (i) Kite Realty will acquire interests
in various entities that own or lease real estate properties in which certain
persons affiliated with the Company, including the Executive, have interests,
(ii) the Company will acquire interests in certain service businesses currently
owned by persons affiliated with the Company, including certain businesses of
the Executive (the “Service Companies”)
and (iii) the Company will effect an initial public offering of its common
shares and contribute the proceeds therefrom for a like number of units of
partnership interest in Kite Realty (the “Kite IPO,”
and together with the other transactions described above, the “Kite IPO Transactions”);

 

WHEREAS, the Executive is currently employed
by one of the Service Companies, KMI Realty Advisors, Inc. (“KMI Realty Advisors”), or an affiliate of
KMI Realty Advisors; and

 

WHEREAS, in connection with the Kite IPO
Transactions, the Company wishes to offer employment to the Executive, and the
Executive wishes to accept such offer, on the terms set forth below.

 

Accordingly, the parties hereto agree as
follows:

 

1.                                       Term.  The Company hereby employs the Executive, and
the Executive hereby accepts such employment for an initial term commencing as
of the date hereof and ending on December 31, 2007, unless sooner terminated in
accordance with the provisions of Section 4 or Section 5 (the period during
which the Executive is employed hereunder being hereinafter referred to as the
“Term”).  The Term shall be subject to automatic
one-year renewals unless either party hereto notifies the other, in accordance
with Section 7.4, of non-renewal at least ninety (90) days prior to the end of
any such Term.  Notwithstanding the
employment of the Executive by the Company, the Company shall be entitled to
pay the Executive from the payroll of any subsidiary of the Company.

 

2.                                       Duties.  The Executive, in his capacity as Executive
Vice President and Chief Operating Officer shall faithfully perform for the
Company the duties of said office and shall perform such other duties of an
executive, managerial or administrative nature as shall be specified and
designated from time to time by the Board of Trustees of the Company (the “Board”), the Executive’s “Reporting
Officer” as designated in Schedule 1 and the Company’s Chief Executive Officer
(including the performance of services for, and serving on the Board of
Directors of, any subsidiary or affiliate of the Company without any additional
compensation).  The Executive shall

 

 

report to the “Reporting
Officer” designated in Schedule 1 subject to the power of the Board or the
Chief Executive Officer to change the designated “Reporting Officer.” The
Executive shall devote substantially all of the Executive’s business time and
effort to the performance of the Executive’s duties hereunder, provided that in
no event shall this sentence prohibit the Executive from performing personal
and charitable activities and any other activities approved by the Board, so
long as such activities do not materially and adversely interfere with the
Executive’s duties for the Company.  The
Board may delegate its authority to take any action under this Agreement to the
Compensation Committee of the Board of Trustees (the “Compensation Committee”).

 

3.                                       Compensation.

 

3.1                                 Salary.  The Company shall pay the Executive during
the Term a base salary at the rate of $275,000 per annum (the “Annual Salary”), in accordance with the
customary payroll practices of the Company applicable to senior executives
generally.  The Annual Salary may be
increased annually by an amount as may be approved by the Board or the
Compensation Committee, and, upon such increase, the increased amount shall
thereafter be deemed to be the Annual Salary for purposes of this Agreement.

 

3.2                                 Bonus.  The Executive will be eligible to participate
in the Company’s annual bonus plan (the “Bonus
Plan”), the terms of which will be established by the Compensation
Committee.  The Executive may be awarded
such restricted shares, share options and other equity-based awards under the
Company’s equity compensation plan (“Equity
Awards”) as the Compensation Committee determines to be appropriate.

 

3.3                                 Benefits
– In General.  The Executive shall be
permitted during the Term to participate in any group life, hospitalization or
disability insurance plans, health programs, pension and profit sharing plans
and similar benefits that may be available to other senior executives of the
Company generally, on the same terms as may be applicable to such other
executives, in each case to the extent that the Executive is eligible under the
terms of such plans or programs.  During
the Term, the Company shall maintain customary liability insurance for trustees
and officers and list the Executive as a covered officer.

 

With respect to each such benefit plan and
program, service with KMI Realty Advisors or any of its affiliates (as
applicable) shall be included for purposes of determining eligibility to
participate (including waiting periods, and without being subject to any entry
date requirement after the waiting period has been satisfied), vesting (as
applicable) and entitlement to benefits. The medical plan or plans maintained
by the Company shall waive all limitations as to pre-existing conditions,
exclusions and waiting periods with respect to participation and coverage
requirements. With respect to vacation benefits provided by the Company, the
vacation benefit of Executive shall include all hours of accrued but unused
vacation and sick time hours, respectively, with KMI Realty Advisors or any of
its affiliates.

 

3.4                                 Vacation.  During the Term, the Executive shall be
entitled to vacation of four(4)weeks per year.

 

3.5                                 Automobile.  During the Term, the Company will provide the
Executive an allowance of $9,000 per year for the use of an automobile
(including the payment of vehicle

 

2

 

insurance).  At the option of the Company, in lieu of
providing such allowance, the Company will provide the Executive with an
automobile of suitable standard to the Executive’s position.

 

3.6                                 Expenses.  The Company shall pay or reimburse the
Executive for all ordinary and reasonable out-of-pocket expenses actually
incurred (and, in the case of reimbursement, paid) by the Executive during the
Term in the performance of the Executive’s services under this Agreement;
provided that the Executive submits such expenses in accordance with the
policies applicable to senior executives of the Company generally.

 

4.                                       Termination
upon Death or Disability.  If the
Executive dies during the Term, the obligations of the Company to or with
respect to the Executive shall terminate in their entirety except as otherwise
provided under this Section 4.  If the
Executive becomes eligible for disability benefits under the Company’s long-term
disability plans and arrangements (or, if none apply, would have been so
eligible under the most recent plan or arrangement), the Company shall have the
right, to the extent permitted by law, to terminate the employment of the
Executive upon notice in writing to the Executive and such termination in and
of itself shall not be, nor shall it be deemed to be, a breach of this
Agreement; provided, that, the Company will have no right to terminate the
Executive’s employment if, in the opinion of a qualified physician reasonably
acceptable to the Company, it is reasonably certain that the Executive will be
able to resume the Executive’s duties on a regular full-time basis within 90
days of the date the Executive receives notice of such termination.

 

Upon death or other termination of employment
by virtue of disability (i) the Executive (or the Executive’s estate or
beneficiaries in the case of the death of the Executive) shall have no right to
receive any compensation or benefit hereunder on and after the Effective Date
of the Termination other than Annual Salary earned and accrued under this
Agreement prior to the Effective Date of the Termination, any bonus for the
prior year not yet paid, and other benefits, including payment for accrued but
unused vacation, earned and accrued under this Agreement prior to the Effective
Date of the Termination (and reimbursement under this Agreement for expenses
incurred but not paid prior to the Effective Date of the Termination) and an
amount equal to the product of (x) the Executive’s target annual bonus for the
fiscal year of the Executive’s death or disability and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Effective Date of the Termination, and the denominator of which is 365; (ii)
all Equity Awards held by the Executive shall become fully vested and
exercisable; and (iii) this Agreement shall otherwise terminate upon the
Effective Date of the Termination and there shall be no further rights with
respect to the Executive hereunder (except as provided in Section 7.13).  For purposes of this Section 4, the “Effective Date of the Termination” shall mean the date of
death or the date on which a notice of termination by virtue of disability is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such notice of termination.

 

For the avoidance of doubt, the Executive
acknowledges and agrees that the payments set forth in this Section 4
constitute liquidated damages for termination of his employment during the Term
upon death or by virtue of disability.

 

3

 

5.                                       Other
Terminations of Employment.

 

5.1                                 Termination
for Cause; Termination of Employment by the Executive Without Good Reason.

 

(a)                                  For
purposes of this Agreement, “Cause”
shall mean:

 

(i)                                     the
Executive’s conviction for (or pleading nolo contendere to) any felony;

 

(ii)                                  the
Executive’s commission of an act of fraud, theft or dishonesty related to the
business of the Company or its affiliates or the performance of the Executive’s
duties hereunder;

 

(iii)                               the
willful and continuing failure or habitual neglect by the Executive to perform
the Executive’s duties hereunder;

 

(iv)                              any
material violation by the Executive of the covenants contained in Section 6 or
that certain Non-Competition Agreement dated as of the date hereof between the
Executive and the Company (the “Non-Competition
Agreement”); or

 

(v)                                 the
Executive’s willful and continuing material breach of this Agreement.

 

For purposes of this Section 5.1, no act, or failure to act, by
Executive shall be considered “willful” unless committed in bad faith and
without a reasonable belief that the act or omission was in the best interests
of the Company or its subsidiaries. 
Notwithstanding the foregoing, if there exists (without regard to this
sentence) an event or condition that constitutes Cause under clause (iii), (iv)
or (v) above, the Executive shall have 30 days from the date written notice is
given by the Company of such event or condition to cure such event or condition
and, if the Executive does so, such event or condition shall not constitute
Cause hereunder.

 

(b)                                 For
purposes of this Agreement, “Good Reason”
shall mean, unless otherwise consented to by the Executive:

 

(i)                                     the
material reduction of the Executive’s authority, duties and responsibilities,
or the assignment to the Executive of duties materially and adversely
inconsistent with the Executive’s position or positions with the Company and
its subsidiaries;

 

(ii)                                  a
reduction in Annual Salary of the Executive except in connection with a
reduction in compensation generally applicable to senior management employees
of the Company;

 

(iii)                               the
failure by the Company to obtain an agreement in form and substance reasonably
satisfactory to the Executive from any successor to the business of the Company
to assume and agree to perform this Agreement;

 

4

 

(iv)                              a
Change in Control (for purposes of this Agreement, “Change in Control” shall mean:

 

(A) the dissolution or
liquidation of the Company, (B) the merger, consolidation, or reorganization of
the Company with one or more other entities in which the Company is not the
surviving entity or immediately following which the persons or entities who
were beneficial owners (as determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of voting
securities of the Company immediately prior thereto cease to beneficially own
more than fifty percent (50%) of the voting securities of the surviving entity
immediately thereafter, (C) a sale of all or substantially all of the assets of
the Company to another person or entity, (D) any transaction (including without
limitation a merger or reorganization in which the Company is the surviving
entity) that results in any person or entity or “group” (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (other than persons who are
shareholders or affiliates immediately prior to the transaction) owning thirty
percent (30%) or more of the combined voting power of all classes of shares of
the Company, or (E) individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a trustee subsequent to the date hereof
whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the trustees then comprising the
Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for
trustee, without written objection to such nomination) shall be considered as
though such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect to the
election or removal of trustees or other actual or threatened solicitation of
proxies or contests by or on behalf of a person other than the Board);

 

(v)                                 a
requirement by the Company that the Executive’s work location be moved more
than fifty (50) miles from the Company’s principal place of business in
Indianapolis, Indiana; or

 

(vi)                              the
Company’s material and willful breach of this Agreement.

 

Notwithstanding the foregoing, if there exists (without regard to this
sentence) an event or condition that constitutes Good Reason under clause (i),
(ii), (v) or (vi) above, the Company shall have 30 days from the date on which
the Executive gives the written notice thereof to cure such

 

5

 

event or condition and, if the
Company does so, such event or condition shall not constitute Good Reason
hereunder.  Further, an event or
condition shall cease to constitute Good Reason one (1) year after the event or
condition first occurs.

 

(c)                                  The
Company may terminate the Executive’s employment hereunder for Cause and such
termination in and of itself shall not be, nor shall it be deemed to be, a
breach of this Agreement.  If the Company
terminates the Executive for Cause, (i) the Executive shall have no right to
receive any compensation or benefit hereunder on and after the Effective Date of
the Termination other than Annual Salary and other benefits, including payment
for accrued but unused vacation (but excluding any bonuses except as provided
in the Bonus Plan) earned and accrued under this Agreement prior to the
Effective Date of the Termination (and reimbursement under this Agreement for
expenses incurred but not paid prior to the Effective Date of the Termination);
and (ii) this Agreement shall otherwise terminate upon the Effective Date of
the Termination and the Executive shall have no further rights hereunder
(except as provided in Section 7.13). 
For purposes of this Section 5.1(c), the “Effective Date of the Termination” shall mean the date on
which a notice of termination is given or any later date (within thirty (30)
days after the giving of such notice) set forth in such notice of termination.

 

(d)                                 The
Executive may terminate his employment without Good Reason.  If the Executive terminates the Executive’s
employment with the Company without Good Reason: (i) the Executive shall have
no right to receive any compensation or benefit hereunder on and after the
Effective Date of the Termination other than Annual Salary and other benefits,
including payment for accrued but unused vacation (but excluding any bonuses
except as provided in the Bonus Plan) earned and accrued under this Agreement
prior to the Effective Date of the Termination (and reimbursement under this
Agreement for expenses incurred but not paid prior to the Effective Date of the
Termination); and (ii) this Agreement shall otherwise terminate upon the
Effective Date of the Termination and the Executive shall have no further
rights hereunder (except as provided in Section 7.13).  For purposes of this Section 5.1(d), the “Effective Date of the Termination” shall
mean the date on which a notice of termination is given or any later date
(within thirty (30) days after the giving of such notice) set forth in such
notice of termination.

 

(e)                                  In the event the
Company elects not to renew this Agreement as contemplated in Section 1 above,
the Executive shall receive (i) a cash payment equal to one (1) times the sum
of: (x) the Executive’s Annual Salary in effect on the day of expiration of the
Term, and (y) the average bonus actually paid to the Executive with respect to
the prior three (3) calendar years, payable no later than 30 days after the day
of expiration of the Term; and (ii) all Equity Awards held by the Executive
shall become fully vested and exercisable.

 

5.2                                 Termination
Without Cause; Termination for Good Reason. 
The Company may terminate the Executive’s employment at any time without
Cause, for any reason or no reason and the Executive may terminate the
Executive’s employment with the Company for Good Reason.  If the Company or the Executive terminates
the Executive’s employment and such termination is not described in Section 4
or Section 5.1, (i) the Executive shall have no right to receive any
compensation or benefit hereunder on and after the Effective Date of the
Termination other than Annual Salary earned and accrued under this Agreement
prior to the Effective Date of the Termination, any bonus for the prior year
not yet paid, and other benefits, including payment for accrued but unused
vacation, earned and accrued under this Agreement prior to the Effective

 

6

 

Date of the Termination (and
reimbursement under this Agreement for expenses incurred but not paid prior to
the Effective Date of the Termination) and an amount equal to the product of
(x) the Executive’s target annual bonus for the fiscal year of the Executive’s
termination of employment and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Effective Date of the
Termination, and the denominator of which is 365; (ii) the Executive shall
receive a cash payment equal to the Severance Payment payable no later than 30
days after the Effective Date of the Termination; (iii) for one (1) year after
the Effective Date of the Termination, the Company shall continue medical,
prescription and dental benefits to the Executive and/or the Executive’s family
at least equal to those which would have been provided to them in accordance
with the welfare benefit plans, practices, policies and programs provided by
the Company to the extent applicable generally to other peer employees of the
Company and its affiliated companies, as if the Executive’s employment had not
been terminated; provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical, prescription and
dental benefits under another employer provided plan, the medical, prescription
and dental benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility; (iv) all Equity
Awards held by the Executive shall become fully vested and exercisable; and (v)
this Agreement shall otherwise terminate upon the Effective Date of the
Termination and the Executive shall have no further rights hereunder (except as
provided in Section 7.13).  The “Severance Payment” means three (3) times
the sum of: (i) the Executive’s Annual Salary in effect on the day of
termination and (ii) the Executive’s Average Annual Bonus.  The Executive’s “Average Annual Bonus” means the average bonus actually paid to
the Executive with respect to the prior three (3) calendar years.  For purposes of this Section 5.2, the “Effective Date of the Termination” shall
mean the date on which a notice of termination is given or any later date
(within thirty (30) days after the giving of such notice) set forth in such
notice of termination, or in the case of termination of employment by the
Executive for Good Reason, the date of termination specified in such
Executive’s notice of termination..

 

5.3                                 Nature
of Payments.  For the avoidance of
doubt, the Executive acknowledges and agrees that the payments set forth in
this Section 5 constitute liquidated damages for termination of his employment
during the Term.

 

6.                                       Confidential
and Proprietary Information.

 

6.1                                 Confidential
Information.  The Executive shall keep
secret and retain in strictest confidence, and shall not use for his personal
benefit or the benefit of others or directly or indirectly disclose, except as
may be required or appropriate in connection with his carrying out his duties
under this Agreement, all confidential information, knowledge or data relating
to the Company or any of its affiliates, or to the Company’s or any such
affiliate’s respective businesses and investments (including confidential
information of others that has come into the possession of the Company or any
such affiliate), learned by the Executive heretofore or hereafter directly or
indirectly from the Company or any of its affiliates and which is not generally
available lawfully and without breach of confidential or other fiduciary
obligation to the general public without restriction (the “Confidential Company Information”), except
with the Company’s express written consent or as may otherwise be required by
law or any legal process.

 

6.2                                 Return
of Documents; Rights to Products. 
All memoranda, notes, lists, records, property and any other tangible
product and documents (and all copies thereof) made,

 

7

 

produced or compiled by the
Executive or made available to the Executive concerning the businesses and
investments of the Company and its affiliates shall be the Company’s property
and shall be delivered to the Company at any time on request.  The Executive shall assign to the Company all
rights to trade secrets and other products relating to the Company’s business
developed by him alone or in conjunction with others at any time while employed
by the Company.

 

6.3                                 Rights
and Remedies upon Breach.  The
Executive acknowledges and agrees that any breach by him of any of the
provisions of this Section 6 (the “RestrictiveCovenants”) would result in
irreparable injury and damage for which money damages would not provide an
adequate remedy.  Therefore, if the
Executive breaches, or threatens to commit a breach of, any of the Restrictive
Covenants, the Company and its affiliates shall have the right and remedy to
have the Restrictive Covenants specifically enforced (without posting bond and
without the need to prove damages) by any court having equity jurisdiction,
including, without limitation, the right to an entry against the Executive of
restraining orders and injunctions (preliminary, mandatory, temporary and
permanent) against violations, threatened or actual, and whether or not then
continuing, of such covenants.  This
right and remedy shall be in addition to, and not in lieu of, any other rights
and remedies available to the Company and its affiliates under law or in equity
(including, without limitation, the recovery of damages).  The existence of any claim or cause of action
by the Executive, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement of the Restrictive Covenants.

 

7.                                       Other
Provisions.

 

7.1                                 Severability.  The Executive acknowledges and agrees that
the Executive has had an opportunity to seek advice of counsel in connection
with this Agreement.  If it is determined
that any of the provisions of this Agreement, or any part thereof, is invalid
or unenforceable, the remainder of the provisions of this Agreement shall not
thereby be affected and shall be given full affect, without regard to the
invalid portions.

 

7.2                                 Enforceability;
Jurisdictions.  The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
the Restrictive Covenants.  If the courts
of any one or more of such jurisdictions hold the Restrictive Covenants wholly
unenforceable by reason of breadth of scope or otherwise it is the intention of
the Company and the Executive that such determination not bar or in any way
affect the Company’s right, or the right of any of its affiliates, to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction’s being, for this purpose,
severable, diverse and independent covenants, subject, where appropriate, to the
doctrine of res judicata.

 

7.3                                 Attorneys’ Fees.  In the event of any legal proceeding relating
to this Agreement or any term or provision thereof, the losing party shall be
responsible to pay or reimburse the prevailing party for all reasonable
attorneys’ fees incurred by the prevailing party in connection with such
proceeding; provided, however, the Executive shall not be required to pay or
reimburse the Company unless the claim or defense asserted by the Executive was
unreasonable.

 

8

 

7.4                                 Notices.  All notices, requests, demands, claims, and
other communications hereunder shall be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly delivered (i) two business
days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, (ii) when received if it is sent by facsimile
communication during normal business hours on a business day or one business
day after it is sent by facsimile and received if sent other than during
business hours on a business day, (iii) one business day after it is sent
via a reputable overnight courier service, charges prepaid, or (iv) when
received if it is delivered by hand, in each case to the intended recipient as
set forth below:

 

(i)                                     If to the Company,
to:

 

Kite Realty Group Trust

30 S. Meridian Street

Suite 1100

Indianapolis, IN  46204

Attention:

Facsimile: 
(317) 577 - 5605

 

(ii)                                  If to the Executive,
to:

Thomas K.
McGowan

 

 

with copies in either case (which shall not
constitute

notice) to:

 

Hogan & Hartson L.L.P.

555 13th Street, NW

Washington, DC 20004

Attention:  William L. Neff, Esq.

Facsimile:  (202) 637-5910

 

and

 

Barnes & Thornburg LLP

11 South Meridian

Indianapolis, IN 46204

Attention: Robert D. MacGill,
Esq.

Facsimile: (317) 231-7433

 

9

 

Any such person may by notice given in accordance with this Section to
the other parties hereto designate another address or person for receipt by
such person of notices hereunder.

 

7.5                                 Entire Agreement.  This Agreement, together with the exhibits
hereto and the Noncompetition Agreement, contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with the Company or its subsidiaries (or any
predecessor of either).

 

7.6                                 Waivers and
Amendments.  This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms hereof may be
waived, only by a written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. 
No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege nor any single or
partial exercise of any such right, power or privilege, preclude any other or
further exercise thereof or the exercise of any other such right, power or
privilege.

 

7.7                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

 

7.8                                 Assignment.  This Agreement, and the Executive’s rights
and obligations hereunder, may not be assigned by the Executive; any purported
assignment by the Executive in violation hereof shall be null and void.  In the event of any Change in Control, the
Company may assign this Agreement and its rights hereunder.

 

7.9                                 Withholding.  The Company shall be entitled to withhold
from any payments or deemed payments any amount of withholding required by
law.  No other taxes, fees, impositions,
duties or other charges or offsets of any kind shall be deducted or withheld
from amounts payable hereunder, unless otherwise required by law.

 

7.10                           No Duty to Mitigate.  The Executive shall not be required to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking other employment or otherwise, nor will any payments hereunder be
subject to offset in the event the Executive does mitigate.

 

7.11                           Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors, permitted
assigns, heirs, executors and legal representatives.

 

7.12                           Counterparts.  This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts together shall constitute one
and the same instrument.  Each
counterpart may consist of two copies hereof each signed by one of the parties
hereto.

 

7.13                           Survival.  Anything contained in this Agreement to the
contrary notwithstanding, the provisions of Sections 6 and 7 (to the extent
necessary to effectuate the survival of Sections 6 and 7) shall survive
termination of this Agreement and any termination of the Executive’s employment
hereunder.

 

10

 

7.14                           Existing Agreements.  Executive represents to the Company that the
Executive is not subject or a party to any employment or consulting agreement,
non-competition covenant or other agreement, covenant or understanding which
might prohibit the Executive from executing this Agreement or limit the
Executive’s ability to fulfill the Executive’s responsibilities hereunder.

 

7.15                           Headings.  The headings in this Agreement are for
reference only and shall not affect the interpretation of this Agreement.

 

7.16                           Parachute Provisions.  If any amount payable to or other benefit
receivable by the Executive pursuant to this Agreement is deemed to constitute
a Parachute Payment (as defined below), alone or when added to any other amount
payable or paid to or other benefit receivable or received by the Executive
which is deemed to constitute a Parachute Payment (whether or not under an
existing plan, arrangement or other agreement), and would result in the
imposition on the Executive of an excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended, then, in addition to any other benefits to
which the Executive is entitled under this Agreement, the Executive shall be
paid by the Company an amount in cash equal to the sum of the excise taxes
payable by the Executive by reason of receiving Parachute Payments plus the
amount necessary to put the Executive in the same after-tax position (taking
into account any and all applicable federal, state and local excise, income or
other taxes at the highest applicable rates on such Parachute Payments and on
any payments under this Section 7.17 ) as if no excise taxes had been imposed
with respect to Parachute Payments.  The
amount of any payment under this Section 7.17 shall be computed by a certified
public accounting firm mutually and reasonably acceptable to the Executive and the
Company, the computation expenses of which shall be paid by the Company.  “Parachute
Payment” shall mean any payment deemed to constitute a “parachute
payment” as defined in Section 280G of the Internal Revenue Code of 1986, as
amended.

 

7.17                           Certain Definitions.  For purposes of this Agreement:

 

(a)                                  an
“affiliate” of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person, and includes subsidiaries.  Notwithstanding the foregoing, the persons
listed on Exhibit A, as such Exhibit A is updated from time to
time by the mutual agreement of the parties, shall not be affiliates of the
Company.

 

(b)                                 A
“business day” means the period from 9:00 am to 5:00 pm on any weekday that is
not a banking holiday in New York City, New York.

 

(c)                                  A
“subsidiary” of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests or no board of
directors or other governing body, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person.

 

11

 

IN WITNESS WHEREOF, the parties hereto have
signed their names as of the day and year first above written.

 

	
   

  	
  KITE REALTY
  GROUP TRUST

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THOMAS K.
  McGOWAN

  
					

 

12

 

EXHIBITS AND SCHEDULES TO THE EMPLOYMENT
AGREEMENT*

 

 

Exhibit A                                               Exclusion
From Affiliates

 

Schedule 1                                      Reporting
Officer

 

*           The registrant agrees
to furnish, supplementally, a copy of omitted Exhibit A and Schedule 1 upon
request.

 

13

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