Document:

Exhibit 10.4

 

 

TRANSITION SERVICES AGREEMENT

 

DATED AS OF [·], 2014

 

BETWEEN

 

SIMON PROPERTY GROUP, INC.

 

AND

 

WASHINGTON PRIME GROUP INC.

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I SERVICES
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01.
    	
General
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.02.
    	
Quality of Services
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.03.
    	
Level of Service
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.04.
    	
Duration of Services
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.05.
    	
Third-Person Services
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.06.
    	
Responsible Personnel
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.07.
    	
Consultation
    	
3
    
	
 
    	
 
    	
 
    
	
Section 1.08.
    	
Monitoring and Reports; Books and Records; Audit Right
    	
3
    
	
 
    	
 
    	
 
    
	
Section 1.09.
    	
Changes to Services
    	
3
    
	
 
    	
 
    	
 
    
	
Section 1.10.
    	
Service Increases
    	
4
    
	
 
    	
 
    	
 
    
	
Section 1.11.
    	
Unintentionally Omitted Services
    	
4
    
	
 
    	
 
    	
 
    
	
Section 1.12.
    	
New Services
    	
4
    
	
 
    	
 
    	
 
    
	
Section 1.13.
    	
Amendments to Schedule A
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE II COMPENSATION; BILLING
    	
5
    
	
 
    	
 
    	
 
    
	
Section 2.01.
    	
Service Fees
    	
5
    
	
 
    	
 
    	
 
    
	
Section 2.02.
    	
Expenses
    	
5
    
	
 
    	
 
    	
 
    
	
Section 2.03.
    	
Taxes
    	
5
    
	
 
    	
 
    	
 
    
	
Section 2.04.
    	
Invoices
    	
5
    
	
 
    	
 
    	
 
    
	
Section 2.05.
    	
Payment Delay; Finance Charges
    	
5
    
	
 
    	
 
    	
 
    
	
Section 2.06.
    	
No Right to Set-Off
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE III COOPERATION AND   CONSENTS
    	
6
    
	
 
    	
 
    	
 
    
	
Section 3.01.
    	
General
    	
6
    
	
 
    	
 
    	
 
    
	
Section 3.02.
    	
Transition
    	
6
    
	
 
    	
 
    	
 
    
	
Section 3.03.
    	
Consents
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE IV CONFIDENTIALITY
    	
6
    
	
 
    	
 
    	
 
    
	
Section 4.01.
    	
Recipient Confidential Information
    	
6
    
	
 
    	
 
    	
 
    
	
Section 4.02.
    	
Provider Confidential Information
    	
7
    
	
 
    	
 
    	
 
    
	
Section 4.03.
    	
Limitations on Confidential Information
    	
8
    
	
 
    	
 
    	
 
    
	
Section 4.04.
    	
Required Disclosure
    	
8
    

 

i

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 4.05.
    	
Third-Person Confidential Information
    	
9
    
	
 
    	
 
    
	
ARTICLE V INTELLECTUAL PROPERTY
    	
9
    
	
 
    	
 
    	
 
    
	
Section 5.01.
    	
Recipient Intellectual Property
    	
9
    
	
 
    	
 
    	
 
    
	
Section 5.02.
    	
Provider Intellectual Property
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE VI REMEDIES AND   LIMITATION OF LIABILITY
    	
9
    
	
 
    	
 
    	
 
    
	
Section 6.01.
    	
Remedies
    	
9
    
	
 
    	
 
    	
 
    
	
Section 6.02.
    	
Limitation of Liability
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE VII INDEMNIFICATION
    	
11
    
	
 
    	
 
    	
 
    
	
Section 7.01.
    	
General
    	
11
    
	
 
    	
 
    	
 
    
	
Section 7.02.
    	
Indemnification Procedures
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII INDEPENDENT   CONTRACTOR
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE IX COMPLIANCE WITH LAWS
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE X TERM AND TERMINATION
    	
12
    
	
 
    	
 
    	
 
    
	
Section 10.01.
    	
Term
    	
12
    
	
 
    	
 
    	
 
    
	
Section 10.02.
    	
Termination of this Agreement
    	
12
    
	
 
    	
 
    	
 
    
	
Section 10.03.
    	
Effect
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE XI NOTICES
    	
14
    
	
 
    	
 
    
	
ARTICLE XII DISPUTE RESOLUTION
    	
14
    
	
 
    	
 
    	
 
    
	
Section 12.01.
    	
Dispute Resolution
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE XIII MISCELLANEOUS
    	
14
    
	
 
    	
 
    	
 
    
	
Section 13.01.
    	
Amendment
    	
14
    
	
 
    	
 
    	
 
    
	
Section 13.02.
    	
Waiver
    	
15
    
	
 
    	
 
    	
 
    
	
Section 13.03.
    	
Governing Law; Jurisdiction
    	
15
    
	
 
    	
 
    	
 
    
	
Section 13.04.
    	
Assignability
    	
15
    
	
 
    	
 
    	
 
    
	
Section 13.05.
    	
Subcontracting
    	
15
    
	
 
    	
 
    	
 
    
	
Section 13.06.
    	
No Third-Person Beneficiaries
    	
15
    
	
 
    	
 
    	
 
    
	
Section 13.07.
    	
Severability
    	
16
    
	
 
    	
 
    	
 
    
	
Section 13.08.
    	
Attorneys’ Fees
    	
16
    
	
 
    	
 
    	
 
    
	
Section 13.09.
    	
Counterparts
    	
16
    
	
 
    	
 
    	
 
    
	
Section 13.10.
    	
Disclaimer of Representations and Warranties
    	
16
    
	
 
    	
 
    	
 
    
	
Section 13.11.
    	
Remedies
    	
16
    
	
 
    	
 
    	
 
    
	
Section 13.12.
    	
Force Majeure
    	
16
    

 

ii

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 13.13.
    	
Specific Performance
    	
17
    
	
 
    	
 
    	
 
    
	
Section 13.14.
    	
Construction
    	
17
    
	
 
    	
 
    	
 
    
	
Section 13.15.
    	
Waiver of Jury Trial
    	
18
    
	
 
    	
 
    	
 
    
	
Section 13.16.
    	
Entire Agreement
    	
18
    
	
 
    	
 
    	
 
    
	
SCHEDULE A TO TRANSITION SERVICES AGREEMENT
    	
A-1
    

 

iii

 

TRANSITION SERVICES AGREEMENT

 

This Transition Services Agreement (this “Agreement”) is entered into and effective as of [·], 2014 (the “Effective Date”), by and between Simon Property Group, Inc., a Delaware corporation (“Provider”), and Washington Prime Group Inc., an Indiana corporation (“Recipient”).  Provider and Recipient may each be referred to herein as a “Party,” and are collectively referred to as the “Parties.”

 

RECITALS

 

WHEREAS, the board of directors of Provider has determined that it is in the best interests of Provider to distribute to holders of Provider common stock all of the common shares of Recipient, a newly formed company that will hold, directly or indirectly, certain assets and liabilities associated with Provider’s strip center and smaller enclosed malls businesses (the “Separation”);

 

WHEREAS, Provider and Recipient have entered into that certain Separation and Distribution Agreement, dated as of [·], 2014 (the “Separation Agreement”), to carry out, effect, and consummate the Separation; and

 

WHEREAS, pursuant to the Separation Agreement, the Parties have agreed that Provider and/or its Subsidiaries (as defined below), which shall include Simon Property Group, L.P., shall provide (or cause to be provided) to Recipient and/or its Subsidiaries, which shall include Washington Prime Group, L.P., and Recipient and/or its Subsidiaries shall receive, certain services, use of facilities, and other assistance on a transitional basis following the Separation and in accordance with the terms of, and subject to, the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and mutual promises, covenants, agreements, representations and warranties contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

SERVICES

 

Section 1.01.                          General.  In accordance with the provisions hereof, Provider shall provide (or cause to be provided) to Recipient and/or its Subsidiaries, and Recipient and/or its Subsidiaries shall receive, the services described in Schedule A attached hereto, which schedule also sets forth the terms and conditions under which Provider will grant to Recipient the use of space at certain facilities within Provider’s current headquarters (each such service, a “Service” and, collectively, the “Services”).      Schedule A may be amended from time to time by written agreement of the Parties. For purposes of this Agreement, a “Subsidiary” of any Party means a corporation or other entity of which at least a majority of the voting power or value of equity securities is owned, directly or indirectly, by such Party.

 

Section 1.02.                          Quality of Services.  Subject to Section 1.03, Provider shall perform the Services (i) in a workmanlike and professional manner, (ii) with the same degree of care as it 

 

 

exercises in performing its own functions of a like or similar nature, (iii) utilizing persons of suitable experience, training and skill, and (iv) in a timely manner in accordance with the provisions of this Agreement.

 

Section 1.03.                          Level of Service.  The Service levels, if any, initially requested by Recipient (the “Initial Service Levels”) shall be as set forth in Schedule A.  Recipient shall furnish Provider with an updated Schedule A, at least thirty (30) days prior to the end of each fiscal quarter, indicating the anticipated Service needs of Recipient for the next fiscal quarter (each, a “Service Request”), and the Parties shall thereafter consult with one another and agree, as provided in Section 1.01 above, as to the elimination of any Service and the timing of, and adjustment to any Service Fees related to, the elimination of such Services.  Subject to Sections 1.10, 1.11 and 1.12, Service levels may not be increased from the Initial Service Levels, including the enhancement of any Services or addition of any new Services, without the written agreement of the Parties.

 

Section 1.04.                          Duration of Services.  Subject to the terms of this Agreement, Provider will provide (or cause to be provided) the Services to Recipient until the earlier of, with respect to each such Service, (i) the expiration of the period of the maximum duration for such Service if set forth in Schedule A, or (ii) the date upon which such Service is terminated under Section 10.02; provided, however, that Recipient shall use its commercially reasonable efforts in good faith to transition itself to a stand-alone entity with respect to each Service as soon as reasonably practicable; and provided, further, that to the extent that Provider’s ability to provide a Service is dependent on the continuation of a related Service (and such dependence has been made known to the other Party), as the case may be, Provider’s obligation to provide such dependent Service shall terminate automatically with the termination of such related Service.

 

Section 1.05.                          Third-Person Services.  Each Party acknowledges and agrees that certain of the Services to be provided under this Agreement may be provided to Recipient by third Persons (as defined below) designated by Provider.  A “Person” means any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, governmental authority or other entity.  To the extent so provided, Provider shall use commercially reasonable efforts to cause such third Persons to continue to provide such Services to Recipient, consistent with the manner in which such Services had been provided historically to Recipient; provided, however, that if any such third Person notifies Provider or its Subsidiaries that it is unable or unwilling to provide any such Services, Provider shall promptly notify Recipient in writing, and shall use its commercially reasonable efforts to determine the manner in which such Services can best be provided, and, if there is any change to the Services provided as a result, including the level or cost thereof, Provider and Recipient shall negotiate in good faith to amend Schedule A as appropriate.

 

Section 1.06.                          Responsible Personnel.  The Parties shall each designate a point of contact for each Service listed in Schedule A to whom any questions related to the Services provided may be directed.  Provider will have the right, in its reasonable discretion, to (i) designate which of its personnel will be involved in providing Services to Recipient, and (ii) remove and replace any such personnel, so long as there is no resulting 

 

2

 

increase in costs, or decrease in the level of service for Recipient; provided, however, that Provider will use its commercially reasonable efforts to limit disruption of the provision of Services to Recipient in the transition of the Services to different personnel.  In the event that the provision of any Service by Provider requires the cooperation and services of applicable personnel of Recipient, Recipient will make available to Provider such personnel as may be necessary for Provider to provide such Service.  Recipient will have the right, in its reasonable discretion, to (i) designate which of its personnel it will make available to Provider in connection with the receipt of such Service, and (ii) remove and replace any such personnel, so long as there is no resulting increase in costs to Provider in providing such Service or adverse effect on Provider’s ability to provide such Service; provided, however, that Recipient will use its commercially reasonable efforts to limit disruption of the provision of services by Provider in the transition of such personnel.

 

Section 1.07.                          Consultation.  The Parties agree to review Schedule A and the Services provided thereunder no less often than quarterly to determine if Provider must continue to provide Recipient all of the Services described on Schedule A.

 

Section 1.08.                          Monitoring and Reports; Books and Records; Audit Right.

 

(a)                                 Provider shall maintain books and records in reasonable and customary detail pertaining to the provision of Services pursuant to this Agreement.  Provider shall make such books and records available for inspection by Recipient, or its authorized representatives, during normal business hours and upon reasonable notice, and shall retain such books and records for periods consistent with the retention policies applicable to Provider’s business.

 

(b)                                 Upon thirty (30) days’ advance written notice to Provider, Recipient may audit (or cause an independent third Person auditor to audit), during regular business hours and in a manner that complies with the confidentiality, building and security requirements of Provider, the books, records and facilities of Provider pertaining to the provision of Services pursuant to this Agreement to the extent necessary to determine Provider’s compliance with this Agreement or as may otherwise be required to ensure compliance with applicable laws or regulations.  Recipient shall have the right to audit such books, records and facilities of Provider only once in any twelve (12)-month period during the term of this Agreement (or on other occasions to the extent agreed to by the Parties).  Any audit under this Section 1.08(b) shall not interfere unreasonably with the operations of Provider.  Recipient shall reimburse Provider for any reasonable, documented, out-of-pocket costs incurred in connection with such audit.

 

Section 1.09.                          Changes to Services.  It is understood and agreed that Provider may from time to time modify, change or enhance the manner, nature and/or quality of any Service provided to Recipient to the extent Provider is making a similar change in the performance of such Services for Provider and its Subsidiaries; provided that any such modification, change or enhancement will not reasonably be expected to materially negatively affect such Services.  Provider shall furnish to Recipient substantially the same notice (in content and timing), if any, as Provider furnishes to its own organization with respect to such modifications, changes or enhancements.

 

3

 

Section 1.10.                          Service Increases.  After the date of this Agreement, if (i) Recipient requests, or Provider reasonably determines that Recipient’s business requires, that Provider increase, relative to historical levels prior to the Separation, the volume, amount, level or frequency, as applicable, of any Service provided by Provider, and (ii) such increase is reasonably determined by Recipient as necessary for Recipient to operate its businesses (such increase, a “Service Increase”), then Provider shall provide such Service Increase in accordance with such request and subject to the Parties agreeing to an amendment to Schedule A to address such Service Increase; provided, however, that Provider shall not be obligated to provide any Service Increase if it does not, in its reasonable judgment, have adequate resources to provide such Service Increase or if the provision of such Service Increase would significantly disrupt the operation of its own business.  In connection with any request for a Service Increase in accordance with this Section 1.10, the Parties shall in good faith negotiate the terms of an amendment to Schedule A, which amendment shall be consistent with the terms of, and the pricing methodology used for, the applicable Service.

 

Section 1.11.                          New Services.

 

(a)                                 From time to time during the term of this Agreement, Recipient may request that Provider provide additional or different services which Provider is not expressly obligated to provide under this Agreement (“New Services”).  Provider shall consider such requests in good faith and shall use commercially reasonable efforts to provide any such New Services; provided, however, that Provider shall not be obligated to provide any New Services if it does not, in its reasonable judgment, have adequate resources to provide such New Services or if the provision of such New Services would significantly disrupt the operation of its own business, or if, after negotiations between the Parties pursuant to Section 1.12(b), the Parties fail to reach an agreement with respect to the terms (including the Service Fees and Expenses (as defined below)) applicable to the provision of such New Services.

 

(b)                                 In connection with any request for New Services, except as otherwise provided in Section 1.12(a), the Parties shall in good faith (i) negotiate the applicable Service Fee and the terms of an amendment to Schedule A, which amendment shall describe in reasonable detail the nature, scope, service period(s), termination provisions and other terms applicable to such New Services, and (ii) determine any costs and expenses, including any start-up costs and expenses that would be incurred by Provider, in connection with the provision of such New Services, which costs and expenses shall be borne solely by Recipient.

 

Section 1.12.                          Amendments to Schedule A.  Each amendment to Schedule A, as agreed to in writing by the Parties, shall be deemed part of this Agreement and the Changes to Services, Service Increases, Unintentionally Omitted Services and/or New Services set forth therein shall be subject to the terms and conditions of this Agreement.

 

4

 

ARTICLE II
 COMPENSATION; BILLING

 

Section 2.01.                          Service Fees.  In consideration for providing the Services, Provider will charge Recipient the fees indicated for each Service listed in Schedule A (each, a “Service Fee” and collectively, the “Service Fees”).  As to the extent provided otherwise in Schedule A, the Service Fees shall be adjusted proportionately on a quarterly basis in accordance with the Service Request provided by Recipient as provided in Section 1.03.

 

Section 2.02.                          Expenses.  Except to the extent provided otherwise in Schedule A, in addition to the Service Fee, Provider shall also be entitled to charge Recipient for any reasonable, documented, out-of-pocket costs and expenses incurred by Provider in providing the Services (“Expenses”).

 

Section 2.03.                          Taxes.  In addition to any amounts otherwise payable by Recipient pursuant to this Agreement, Recipient shall pay, be responsible, and promptly reimburse Provider, for any sales, use, value added, goods and services, excise, transfer, recording or similar taxes, including any interest, penalties or additional amounts imposed with respect thereto, imposed with respect to, or in connection with, the provision of Services or payment of any Service Fees hereunder.

 

Section 2.04.                          Invoices.  Within thirty (30) days after the end of each calendar month, Provider shall send Recipient an invoice that includes in reasonable detail the Service Fees and Expenses due for Services provided to Recipient for such month.  Payments of invoices shall be made by check or wire transfer of immediately available funds to one or more accounts specified in writing by Provider.  Payment shall be made within thirty (30) days after the date of receipt of Provider’s invoice.  All amounts payable to Provider hereunder shall be paid without set-off, deduction, abatement or counterclaim.

 

Section 2.05.                          Payment Delay; Finance Charges.

 

(a)                                 If Recipient fails to make any material payment within thirty (30) days of the date such payment was due to Provider, Provider shall have the right, at its sole option, upon ten (10) business days’ prior written notice (such notice, a “Suspension Notice”), to suspend performance of any Services until payment has been received.

 

(b)                                 If Recipient fails to make any payment within thirty (30) days of the date such payment was due to Provider, a finance charge of two percent (2%) per month, payable from the date of the invoice to the date such payment is received and levied upon both the balance of any such payment, shall be due and payable to Provider.  In addition, Recipient shall indemnify Provider for its costs, including reasonable attorneys’ fees and disbursements incurred to collect any unpaid amount.

 

(c)                                  Recipient shall not be liable for the payment of any finance charges pursuant to this Section 2.05, and Provider shall not be authorized to suspend performance 

 

5

 

pursuant to this Section 2.05, to the extent, but only to the extent, that Recipient is in good faith disputing Service Fees or Expenses incurred under Sections 2.01 and 2.02.

 

Section 2.06.                          No Right to Set-Off.  Recipient shall pay the full amount of all Service Fees and shall not set off, counterclaim or otherwise withhold any amount owed to Provider under this Agreement on account of any obligation owed by Provider to Recipient.

 

ARTICLE III
 COOPERATION AND CONSENTS

 

Section 3.01.                          General.  Each Party shall reasonably cooperate with and provide assistance to the other Party in carrying out the provisions of this Agreement.  Such cooperation shall include, but not be limited to, exchanging information, providing access to electronic systems used in connection with the Services, making adjustments and obtaining all consents, licenses, sublicenses or approvals necessary to permit each Party to perform its obligations hereunder; provided, however, that neither Party shall be required to disclose confidential, proprietary, privileged or competitively sensitive information to the other Party.

 

Section 3.02.                          Transition.  At the request of Recipient in contemplation of the termination of any Services hereunder, in whole or in part, Provider shall cooperate with Recipient, at Recipient’s expense, in transitioning such Services to Recipient or to any third-Person service provider designated by Recipient.

 

Section 3.03.                          Consents.  Provider will take commercially reasonable efforts to obtain, and to keep and maintain in effect, any third-Person licenses and consents necessary to provide the Services (the “Consents”).  The costs relating to obtaining any such licenses or Consents obtained solely for the benefit of Recipient shall be borne by Recipient; provided that Provider shall not incur any such costs without the prior written consent of Recipient.  If any such consent is not obtained or maintained, Provider shall promptly notify Recipient in writing, and the Parties will reasonably cooperate with one another to achieve a reasonable alternative arrangement with respect thereto.

 

ARTICLE IV

CONFIDENTIALITY

 

Section 4.01.                          Recipient Confidential Information.  From and after the Effective Date, subject to Section 4.04, and except as contemplated by or otherwise provided for under this Agreement or the Separation Agreement, Provider shall not, and shall cause its affiliates and its own and its affiliates’ officers, directors, employees, and other agents and representatives, including attorneys, agents, customers, suppliers, contractors, consultants and other representatives (collectively, “Representatives”), to not, directly or indirectly, disclose, reveal, divulge or communicate to any Person, other than to Recipient and its affiliates (collectively, the “Recipient Group”) and their respective Representatives, and to Provider and its affiliates (collectively, the “Provider Group”) and their respective Representatives who reasonably need to know such information in connection with the provision of Services under this Agreement, or use or otherwise exploit for its own benefit or for the benefit of any third Person (other than members of the Recipient Group), any Recipient Confidential Information (as defined below).  

 

6

 

For the purposes of this Agreement, “Group” shall mean the Provider Group or the Recipient Group, as the context requires.  If any disclosures are made by members of the Recipient Group to members of the Provider Group in connection with the provision of Services under this Agreement, then the Recipient Confidential Information so disclosed shall be used by the Provider Group only as required to perform the Services.  Provider shall use the same degree of care to prevent and restrain the unauthorized use or disclosure of the Recipient Confidential Information by any member of the Provider Group or its Representatives as it uses for its own confidential information of a like nature, but in no event less than a reasonable standard of care.  For purposes of this Agreement, any information, material or documents relating to the businesses currently or formerly conducted, or proposed to be conducted, by the Recipient Group that is furnished to, or in possession of, any member of the Provider Group, in each case in connection with the Services provided under this Agreement and irrespective of the form of communication, and all notes, analyses, compilations, forecasts, data, translations, studies, memoranda or other documents prepared by members of the Provider Group, that contain, or otherwise reflect, such information, material or documents is hereinafter referred to as “Recipient Confidential Information.”  Recipient Confidential Information does not include, and there shall be no obligation hereunder, with respect to information that (i) is or becomes generally available to the public, other than as a result of a disclosure by a member of the Provider Group or its Representatives not otherwise permissible hereunder, (ii) Provider can demonstrate was or became available to the Provider Group from a source other than the Recipient Group or its Representatives, or (iii) is developed independently by the Provider Group without reference to the Recipient Confidential Information; provided, however, that, in the case of clause (ii), the source of such information was not known by Provider to be bound by a confidentiality or non-disclosure agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, any member of the Recipient Group with respect to such information.

 

Section 4.02.                          Provider Confidential Information.  From and after the Effective Date, subject to Section 4.04, and except as contemplated by or otherwise provided for under this Agreement or the Separation Agreement, Recipient shall not, and shall cause the members of the Recipient Group and their respective Representatives to not, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than members of the Provider Group and its Representatives, or members of the Recipient Group and its Representatives, who reasonably need to know such information in connection with the provision of services under this Agreement, or use or otherwise exploit for its own benefit or for the benefit of any third Person (other than members of the Provider Group), any Provider Confidential Information (as defined below).  If any disclosures are made by members of the Provider Group to members of the Recipient Group in connection with the provision of Services under this Agreement, then the Confidential Information (as defined below) so disclosed shall be used by the Recipient Group only as required to receive the Services.  Recipient shall use the same degree of care to prevent and restrain the unauthorized use or disclosure of the Provider Confidential Information by any member of the Recipient Group or its Representatives as it uses for its own confidential information of a like nature, but in no event less than a reasonable standard of care.  For purposes of this Agreement, any information, material or documents relating to the businesses currently or formerly conducted, or proposed to be conducted, by the Provider Group that is furnished to, or in possession of, any member of the Recipient Group, in each case in connection with the Services provided under this Agreement and irrespective of the form of communication, and all 

 

7

 

notes, analyses, compilations, forecasts, data, translations, studies, memoranda or other documents prepared by members of the Recipient Group, that contain, or otherwise reflect, such information, material or documents, is hereinafter referred to as “Provider Confidential Information,” and, together with the Recipient Confidential Information, “Confidential Information.”  Provider Confidential Information does not include, and there shall be no obligation hereunder with respect to, information that (i) is or becomes generally available to the public, other than as a result of a disclosure by any member of the Recipient Group or its Representatives not otherwise permissible hereunder, (ii) Recipient can demonstrate was or became available to the Recipient Group from a source other than the Provider Group or its Representatives, or (iii) is developed independently by the Recipient Group without reference to the Provider Confidential Information; provided, however, that, in the case of clause (ii), the source of such information was not known by Recipient to be bound by a confidentiality or non-disclosure agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, any member of the Provider Group with respect to such information.

 

Section 4.03.                          Limitations on Confidential Information.  For the duration of this Agreement, Provider agrees that access to Recipient Confidential Information that is received from any member of the Recipient Group during the course of the performance of this Agreement shall be (i) limited to only those employees of the Provider Group that are providing Services under this Agreement and who have been informed of the obligations and restrictions under this Section 4.03; (ii) used only for the purpose of providing Services pursuant to this Agreement; and (iii) shall otherwise be kept strictly confidential by all members of the Provider Group, except that Provider may share, to the extent necessary to provide Services pursuant to this Agreement, such information to any member of the Provider Group or to any third Person who may have a need to know such information for purposes of providing the Services; provided, that any such member of the Provider Group or third-Person service provider shall have agreed to be bound by this Section 4.03 and shall be liable for any breaches of this Section 4.03 by any member of the Provider Group or third-Person service provider.  The obligations under this Section 4.03 shall not apply to (i) information that is already in the possession of employees of the Provider Group; (ii) information that becomes generally available to the public other than as a result of a disclosure, directly or indirectly, by any member of the Provider Group; or (iii) information that becomes available to any member of the Provider Group on a non-confidential basis from a source other than any member of the Recipient Group; provided, that such source is not known by any member of the Provider Group, after reasonable inquiry, to be subject to an obligation of confidentiality or other obligation of secrecy to Recipient.

 

Section 4.04.                          Required Disclosure.  Either Party may disclose Confidential Information to the extent reasonably necessary in connection with the enforcement of this Agreement or as required by law or legal or regulatory process (including to the extent requested by any governmental authority in connection with any such law or legal or regulatory process), including any tax audit or litigation.  If either Group, or any third Person with whom Provider has shared Recipient Confidential Information received from any member of the Recipient Group during the course of the performance of this Agreement, is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any governmental authority, or pursuant to applicable law, to disclose or provide any Confidential Information, the Party or third Person receiving such

 

8

 

request or demand shall use commercially reasonable efforts to provide the Party whose Confidential Information is subject to such request or demand with written notice of such request or demand as promptly as practicable, under the circumstances, so that such relevant Party shall have an opportunity to seek an appropriate protective order.  The Party or third Person receiving such request or demand agrees to take, and to cause its Representatives to take, at the expense of the Party whose Confidential Information is subject to such request or demand, all other reasonable steps necessary to obtain confidential treatment of the Confidential Information in question.  Subject to the foregoing, the Party or third Person that receives such a request or demand may thereafter disclose or provide Confidential Information, to the extent required by law (as so advised by counsel), or by lawful process of such governmental authority.

 

Section 4.05.                          Third-Person Confidential Information.  Each Party acknowledges that it and the other members of its Group may have in their possession confidential or proprietary information of third Persons (such information, “Third-Person Confidential Information”) that was received under confidentiality or non-disclosure agreements with such third Persons.  Each Party agrees that it will hold, and will cause the other members of its Group and their respective Representatives to hold, in strict confidence, any Third-Person Confidential Information to which it or any other member of its respective Group has access, in accordance with the terms of any agreements entered into between or among one (1) or more members of the applicable Party’s Group and such third Persons; provided, that each Party has been provided with a copy of such confidentiality or non-disclosure agreement and informed by the other Party of the confidential and proprietary nature of the information.

 

ARTICLE V
 INTELLECTUAL PROPERTY

 

Section 5.01.                          Recipient Intellectual Property.  Except as otherwise agreed by the Parties, all data, software, or other property or assets owned or created by Recipient, including, without limitation, derivative works thereof, and new data or software created by Recipient at Recipient’s expense, in connection with its receipt of Services and all intellectual property rights therein (the “Recipient Property”), shall remain the sole and exclusive property and responsibility of Recipient.  Provider shall not acquire any rights in any Recipient Property pursuant to this Agreement.

 

Section 5.02.                          Provider Intellectual Property.  Except as otherwise agreed by the Parties, all data, software or other property or assets owned or created by Provider, including, without limitation, derivative works thereof, and new data or software created by Provider at Provider’s expense, in connection with the provision of Services and all intellectual property rights therein (the “Provider Property”), shall be the sole and exclusive property and responsibility of Provider.  Recipient shall not acquire any rights in any Provider Property pursuant to this Agreement.

 

ARTICLE VI
 REMEDIES AND LIMITATION OF LIABILITY

 

Section 6.01.                          Remedies.  In the event that any Service performed by Provider hereunder is not performed in accordance with the provisions of Article I, the sole remedy of Recipient shall be (i) to require Provider to re-perform such Service in accordance with Article I without 

 

9

 

obligation on the part of Recipient to make additional payments for such performance, (ii) to obtain from Provider a credit in an equivalent amount towards the future purchase of any Services that are contemplated by and under the terms of this Agreement, or (iii) to replace such Service with service provided by a third-Person provider.  In the event that Recipient elects to replace any Services with a third-Person provider, Provider shall be forever released from any liability arising on account of such Service and shall not be entitled to any Service Fees in respect of services provided by such third-Person provider to Recipient.

 

Section 6.02.                          Limitation of Liability.

 

(a)                                 No member of the Provider Group or their respective controlling persons, directors, officers, employees, agents and permitted assigns (each, a “Provider Party”) shall be liable to any member of the Recipient Group or their respective controlling persons, directors, officers, employees, agents and permitted assigns (each, a “Recipient Party”) for any liabilities, claims, demands, damages, judgments, losses, costs and expenses (including, but not limited to, court costs, reasonable attorneys’ fees and/or amounts paid in settlement) of any kind or nature, whether direct or indirect (collectively referred to as “Damages”), of any Recipient Party resulting from, relating to or arising in connection with, this Agreement or any of the Services provided hereunder, except for any liability of Provider to the extent that such Damages resulted from (i) any acts or omissions of any Provider Party, which acts or omissions are the result of gross negligence, willful misconduct or bad faith by such Provider Party, or (ii) Provider’s breach of its obligations under Article IV or Article VII of this Agreement.

 

(b)                                 No Recipient Party shall be liable to any Provider Party for any Damages to any Provider Party resulting from, relating to or arising in connection with this Agreement, or any of the Services provided hereunder, except for any liability of Recipient to the extent that such Damages resulted from (i) acts or omissions of any Recipient Party, which acts or omissions are the result of gross negligence, willful misconduct or bad faith by such Recipient Party, or (ii) Recipient’s breach of its obligations under Article IV or Article VII of this Agreement.

 

(c)                                  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, AT LAW OR EQUITY, FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE, CONSEQUENTIAL OR SIMILAR DAMAGES (INCLUDING LOST PROFITS OR DAMAGES CALCULATED ON MULTIPLES OF EARNINGS APPROACHES) IN EXCESS OF COMPENSATORY DAMAGE, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT.

 

(d)                                 Each Party agrees that it shall, in all circumstances, use commercially reasonable efforts to mitigate, and to otherwise minimize its Damages, and those of all members of its Group and their respective controlling persons, directors, officers, employees, agents and permitted assigns, whether direct or indirect, resulting from, or arising in connection with, any failure by the other Party to comply fully with its obligations under this Agreement.

 

10

 

(e)                                  In no event, whether as a result of breach of contract, indemnity, warranty, tort (including negligence), strict liability, or otherwise, shall the liability of any Party to the other Party for any loss or damage arising out of, or resulting from, this Agreement or the furnishing of Services hereunder exceed the aggregate Service Fees actually paid pursuant to this Agreement during the twelve (12)-month period immediately preceding the applicable claim for losses or damages.

 

ARTICLE VII

INDEMNIFICATION

 

Section 7.01.                          General.

 

(a)                                 Provider shall indemnify and hold harmless any Recipient Party against and from all Damages payable to third Persons arising out of or relating to (i) a breach of Article IV of this Agreement by Provider, (ii) the gross negligence or willful misconduct of Provider, and (iii) any infringement by Provider of third-Person intellectual property in the performance of any Service, in each case, except to the extent that such Damages are a result of the breach of this Agreement, gross negligence, or willful misconduct on the part of any Recipient Party.

 

(b)                                 Recipient shall indemnify and hold harmless any Provider Party against and from all Damages payable to third Persons arising out of or relating to (i) a breach of Article IV of this Agreement by Recipient, (ii) the gross negligence or willful misconduct of Recipient, and (iii) any infringement by Recipient of third-Person intellectual property in connection with the receipt of any Service, in each case except to the extent that such Damages are a result of the breach of this Agreement, gross negligence, or willful misconduct on the part of any Provider Party.

 

Section 7.02.                          Indemnification Procedures.  The provisions of Article V of the Separation Agreement shall govern, mutatis mutandis, claims for indemnification under this Article VII.

 

ARTICLE VIII
 INDEPENDENT CONTRACTOR

 

In performing the Services hereunder, each Group shall operate as, and have the status of, an independent contractor.  No Party’s employees shall be considered employees or agents of the other Party, nor shall the employees of either Party be eligible or entitled to any benefits, perquisites, or privileges given or extended to any of the other Party’s employees.  Nothing contained in this Agreement shall be deemed or construed to create a joint venture or partnership between the Parties.  No Party shall have any power or authority to bind or commit any other Party.

 

ARTICLE IX
 COMPLIANCE WITH LAWS

 

In the performance of its duties and obligations under this Agreement, each Party shall comply with all applicable laws.  The Parties shall cooperate fully in obtaining and maintaining in effect all permits and licenses that may be required for the performance of the Services.

 

11

 

ARTICLE X
 TERM AND TERMINATION

 

Section 10.01.                   Term.  The term of this Agreement shall commence on the Effective Date and end on the second (2nd) anniversary of the Effective Date, unless terminated earlier as provided in Section 10.02. Except as may be otherwise set forth in Schedule A, and subject to the last proviso of Section 1.04, Recipient may terminate any Service prior to the scheduled expiration date by giving Provider not less than one hundred eighty (180) days’ prior written notice, or such less time as may be agreed upon by the Parties.  Services can only be terminated at month-end.  To the extent there are any break-up costs (including commitments made to, or in respect of, personnel or third Persons due to the requirement to provide the Services, prepaid expenses related to the Services or costs related to terminating such commitments) reasonably incurred by Provider as a result of any early termination of a Service by Recipient, Provider shall use its reasonable best efforts to mitigate such costs, and Recipient shall bear such costs and reimburse Provider in full for the same.

 

Section 10.02.                   Termination of this Agreement.  This Agreement may be terminated:

 

(a)                                 by the written agreement of the Parties;

 

(b)                                 by Provider in the event that it delivers a Suspension Notice to Recipient and suspends delivery of a Service in accordance with Section 2.05(a), and such Suspension Notice is not satisfied within thirty (30) days of the date of delivery of such Suspension Notice;

 

(c)                                  by either Party upon a material breach (other than non-payment of Service Fees or Expenses) by the other Party that is not cured within thirty (30) days after delivery of written notice of such breach from the non-breaching Party;

 

(d)                                 immediately by either Party, if the other Party:  (i) commences a voluntary case or other proceeding seeking bankruptcy protection, liquidation, reorganization or similar relief, or seeks the appointment of a trustee, receiver, liquidator or other similar official or the taking of possession by any such official in any involuntary case or other proceeding commenced against it, or makes a general assignment for the benefit of creditors or fails generally to pay its debts as they become due; or (ii) has an involuntary case or other proceeding commenced against it seeking bankruptcy protection, liquidation, reorganization, or other relief with respect to it or substantially all of its debts, or seeks the appointment of a trustee, receiver, liquidator, custodian or other similar official for such Party or any substantial part of such Party’s property, and such involuntary case or other proceeding remains undismissed for a period of sixty (60) days;

 

(e)                                  by either Party if all of the Services have been terminated early in accordance with Section 10.01; or

 

(f)                                   by either Party, upon a Change in Control (as defined below) of the other Party; provided that notice of a Change of Control is provided to the other Party not later than ten (10) days prior to signing a definitive agreement and, in any event, not later than 

 

12

 

sixty (60) days prior to consummation of such Change in Control.  For the purposes of this Agreement, “Change in Control” shall mean, with respect to a Party, the occurrence after the Effective Date of any of the following:  (i) the sale, conveyance or disposition, in one or a series of related transactions, of all or substantially all of the assets of such Party and its Group (taken as a whole) to a third Person that is not a member of such Party’s Group prior to such transaction or the first of such related transactions; (ii) the consolidation, merger or other business combination of a Party with or into any other Person, immediately following which the then-current shareholders of the Party, as such, fail to own, in the aggregate, at least majority voting power of the surviving Party in such consolidation, merger or business combination, or of its ultimate publicly traded parent; (iii) a transaction or series of transactions in which any Person or “group” (as the term “group” is used in Sections 13(d) and 14(d) of the United States Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder) acquires majority voting power of such Party (other than a reincorporation or similar corporate transaction in which each of such Party’s shareholders owns, immediately thereafter, interests in the new parent company in substantially the same percentage as such shareholder owned in such Party immediately prior to such transaction); or (iv) a majority of the board of directors of such Party ceases to consist of individuals who have become directors as a result of being nominated or elected by a majority of such Party’s directors.

 

Section 10.03.                   Effect.  In the event of termination of this Agreement in its entirety pursuant to this Article X, or upon the expiration of the term of this Agreement, this Agreement shall cease to have further force or effect, and neither Party shall have any liability to the other Party with respect to this Agreement; provided that:

 

(a)                                 termination or expiration of this Agreement for any reason shall not release a Party from any liability or obligation that already has accrued as of the effective date of such termination or expiration, and shall not constitute a waiver or release of, or otherwise be deemed to adversely affect, any rights, remedies or claims which a Party may have hereunder at law, equity or otherwise or which may arise out of or in connection with such termination or expiration;

 

(b)                                 as promptly as practicable, following termination of this Agreement in its entirety or with respect to any Service to the extent applicable, and the payment by Recipient of all amounts owing hereunder, Provider shall return all reasonably available material, inventory and other property of Recipient held by Provider, and shall deliver copies of all of Recipient’s records maintained by Provider with regard to the Services in Provider’s standard format and media.  Provider shall deliver such property and records to such location or locations, as reasonably requested by Recipient.  Arrangements for shipping, including the cost of freight and insurance, and the reasonable cost of packing incurred by Provider shall be borne by Recipient; and

 

(c)                                  Articles IV, V, VI, VII, IX, XI, XII and XIII, and this Section 10.03, shall survive any termination or expiration of this Agreement and remain in full force and effect.

 

13

 

ARTICLE XI

NOTICES

 

All notices, demands and other communications required to be given to a Party hereunder shall be in writing and shall be personally delivered, sent by a nationally recognized overnight courier, transmitted by facsimile or e-mail, or mailed by registered or certified mail (postage prepaid, return receipt requested) to such Party at the relevant street address, facsimile number or e-mail address set forth below (or at such other street address, facsimile number or e-mail address as such Party may designate from time to time by written notice in accordance with this provision):

 

If to Provider, to:

 

[·]

Attention:         [·]

Facsimile:         [·]

 

If to Recipient, to:

 

[·]

Attention:         [·]

Facsimile:         [·]

 

Any notice, demand or other communication hereunder shall be deemed given upon the first to occur of:  (i) the fifth (5th) day after deposit thereof, postage prepaid and addressed correctly, in a receptacle under the control of the United States Postal Service; (ii) transmittal by facsimile or e-mail transmission to a receiver or other device under the control of the Party to whom notice is being given; or (iii) actual delivery to or receipt by the Party to whom notice is being given.

 

ARTICLE XII
 DISPUTE RESOLUTION

 

Section 12.01.                   Dispute Resolution.  The provisions of Article [·] of the Separation Agreement shall apply, mutatis mutandis, to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with this Agreement or the transactions contemplated hereby.

 

ARTICLE XIII
 MISCELLANEOUS

 

Section 13.01.                   Amendment.  No provision of this Agreement, including Schedule A, may be amended, supplemented or modified except by a written instrument signed by both of the Parties and making specific reference to this Agreement or to Schedule A, as applicable.

 

14

 

Section 13.02.                   Waiver.

 

(a)                                 Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or the Parties entitled to the benefit thereof.  Any such waiver shall be validly and sufficiently given for the purposes of this Agreement if, as to any Party, it is executed by a writing signed by an authorized representative of such Party.

 

(b)                                 Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be construed to be a waiver by the waiving Party of any subsequent or other default, nor shall it in any way affect the validity of this Agreement or prejudice the rights of the other Party, thereafter, to enforce each and every such provision.  No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof, or the exercise of any other right, power or privilege.

 

Section 13.03.                   Governing Law; Jurisdiction.  This Agreement, and the legal relations between the Parties hereto, shall be governed by and construed in accordance with the laws of the State of Indiana, without regard to the conflict of laws rules thereof, to the extent such rules would require the application of the law of another jurisdiction.  In addition, with respect to this Agreement (other than arbitrable Disputes (as defined in the Separation Agreement) governed by Article XII), the Parties agree that any legal action or proceeding shall be brought or determined exclusively in a state or federal court located within the County of Marion in the State of Indiana.

 

Section 13.04.                   Assignability.  This Agreement shall be binding upon, and inure to the benefit of, the Parties, and their respective successors and permitted assigns; provided, however, that no Party may assign, delegate or transfer (by operation of law or otherwise) its respective rights, or delegate its respective obligations, under this Agreement without the express prior written consent of the other Party.  Notwithstanding the foregoing, either Party may assign its rights and obligations under this Agreement to (i) any member of such Party’s Group; provided, however, that each Party shall at all times remain liable for the performance of its obligations under this Agreement by any such Group member, or (ii) any successor by merger, consolidation, reorganization, recapitalization, acquisition or person acquiring all or substantially all of the assets of such Party, subject to Section 10.02(f).  Any attempted assignment or delegation in violation of this Section 13.04 shall be null and void.

 

Section 13.05.                   Subcontracting.  Provider may hire or engage one or more subcontractors to perform any or all of its obligations under this Agreement; provided, that (i) Provider shall use the same degree of care in selecting any subcontractors as it would if such subcontractor was being retained to provide similar services to Provider, (ii) the use of such subcontractor will not increase the Service Fees or Expenses payable by Recipient in connection with such Services, and (iii) Provider shall, in all cases, remain responsible for ensuring that obligations with respect to the standards of services set forth under this Service Agreement are satisfied with respect to any Service provided by a subcontractor hired or engaged by Provider.

 

Section 13.06.                   No Third-Person Beneficiaries.  Except for the indemnification provisions in Article VII, this Agreement is for the sole benefit of the Parties and their successors and assigns, and nothing herein, express or implied, is intended to or shall confer upon any other

 

15

 

Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

 

Section 13.07.                   Severability.  If any provision of this Agreement, or the application thereof to any Person or circumstance, is determined by a court of competent jurisdiction to be invalid, null and void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid, null and void or unenforceable, shall remain in full force and effect, and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

Section 13.08.                   Attorneys’ Fees.  In any action hereunder to enforce the provisions of this Agreement, the prevailing Party shall be entitled to recover its reasonable attorneys’ fees, in addition to any other recovery hereunder from the non-prevailing Party.

 

Section 13.09.                   Counterparts.  This Agreement may be executed in one or more counterparts, each of which, when so executed and delivered or transmitted by facsimile, e-mail or other electronic means, shall be deemed to be an original, and all of which taken together shall constitute but one and the same instrument.  A facsimile or electronic signature is deemed an original signature for all purposes under this Agreement.

 

Section 13.10.                   Disclaimer of Representations and Warranties.  EXCEPT FOR THE REPRESENTATIONS, WARRANTIES AND COVENANTS EXPRESSLY MADE IN THIS AGREEMENT, NEITHER PARTY HAS MADE, NOR DOES EITHER PARTY HEREBY MAKE, ANY EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES OR COVENANTS, STATUTORY OR OTHERWISE, OF ANY NATURE, INCLUDING WITH RESPECT TO THE WARRANTIES OF MERCHANTABILITY, QUALITY, QUANTITY, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.  ALL OTHER REPRESENTATIONS, WARRANTIES, AND COVENANTS, EXPRESS OR IMPLIED, STATUTORY, COMMON LAW OR OTHERWISE, OF ANY NATURE, INCLUDING WITH RESPECT TO THE WARRANTIES OF MERCHANTABILITY, QUALITY, QUANTITY, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY EACH PARTY.

 

Section 13.11.                   Remedies.  The rights and remedies provided herein shall be cumulative and not exclusive of any rights or remedies provided by law.

 

Section 13.12.                   Force Majeure.

 

(a)                                 Neither Party (nor any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as, and to the extent to which, the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure; provided that (i) such Party (or such Person) shall have exercised commercially reasonable efforts to minimize the effect of Force Majeure on its obligations, and (ii) the nature, quality and standard

 

16

 

of care that Provider shall provide in delivering a Service after a Force Majeure shall again comply with Section 1.03.  In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of such cause.

 

(b)                                 During the period of a Force Majeure, Recipient shall be entitled to seek an alternative service provider with respect to such Service(s) (and shall be relieved of the obligation to pay Service Fees for such Service(s) throughout the duration of such Force Majeure) and shall be entitled to permanently terminate such Service(s) if a Force Majeure shall continue to exist for more than sixty (60) consecutive days, it being understood that Recipient shall provide advance notice of such termination to Provider.

 

Section 13.13.                   Specific Performance.  Subject to the provisions of Article XII, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to seek specific performance and injunctive or other equitable relief (on an interim or permanent basis), in addition to any and all other rights and remedies at law or in equity.  The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.

 

Section 13.14.                   Construction.  Any uncertainty or ambiguity with respect to any provision of this Agreement shall not be construed for or against any party based on attribution of drafting by either Party.  The headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  In this Agreement, unless the context requires or a clear contrary intention appears:

 

(a)                                 the singular number includes the plural number and vice versa;

 

(b)                                 reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;

 

(c)                                  reference to any gender includes each other gender;

 

(d)                                 reference to any agreement, document or instrument means such agreement, document or instrument, as amended, modified, supplemented or restated, and in effect from time to time in accordance with the terms thereof, subject to compliance with the requirements set forth herein;

 

(e)                                  reference to any applicable law means such applicable law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to

 

17

 

time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any applicable law means that provision of such applicable law, from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;

 

(f)                                   “herein,” “hereby,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular article, section or other provision hereof;

 

(g)                                  “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term;

 

(h)                                 with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but excluding;” and

 

(i)                                     references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto.

 

Section 13.15.                   Waiver of Jury Trial.  EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTY TO THIS AGREEMENT HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION AGREEMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.15.

 

Section 13.16.                   Entire Agreement.  This Agreement and Schedule A hereto, as well as any other agreements and documents referred to herein (including the Separation Agreement, to the extent applicable), constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersede all previous agreements, negotiations, discussions, understandings, writings, commitments and conversations between the Parties with respect to such subject matter.  No agreements or understandings exist between the Parties other than those set forth or referred to herein.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

18

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized officers or representatives as of the date first written above.

 

	
 
    	
SIMON PROPERTY GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
[·]
    
	
 
    	
 
    	
Title:
    	
[·]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WASHINGTON PRIME GROUP INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
[·]
    
	
 
    	
 
    	
Title:
    	
[·]Exhibit 10.7

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT (the “Agreement”) is made and entered into by and between WASHINGTON PRIME GROUP, INC., an Indiana corporation (the “Company”), and MARK ORDAN (the “Executive”), executed on February 25, 2014 (the “Execution Date”) and effective as of consummation of the distribution (the “Distribution”) of the shares of the Company to the shareholders of Simon Property Group, Inc. (the date of such distribution, the “Effective Date”).

 

WHEREAS, the Company desires to employ the Executive as its Chief Executive Officer effective on the Effective Date, and for the Executive to provide services to both the Company and Washington Prime Group, L.P., the operating partnership which will be formed prior to the Effective Date and be substantially wholly owned by the Company (the “Partnership”), on the terms and conditions, and for the consideration, hereinafter set forth, and the Executive desires to be employed by the Company and to provide services to both the Company and the Partnership on and following the Effective Date, on such terms and conditions and for such consideration.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1. Effectiveness of Agreement; Term.  This Agreement shall become effective on the Effective Date.  This Agreement shall become null and void ab initio, and neither the Company nor the Executive shall have any rights or obligations hereunder, if the Distribution has not occurred prior to the earliest of (i) a determination by the Board of Directors of the Company (the “Board”) that the Distribution shall not occur, (ii) a withdrawal by the Company of the Form 10 filed with the U.S. Securities and Exchange Commission regarding the Distribution, and (iii) June 30, 2014.  Upon the occurrence of the Effective Date, the Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company and the Partnership, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third (3rd) annual anniversary of the Effective Date (the “Employment Period”); provided, that, on the third (3rd) anniversary of the Effective Date and each annual anniversary of such date thereafter (such date and each annual anniversary thereof, a “Renewal Date”), unless previously terminated in accordance with the provisions of Section 3 hereof, the Employment Period shall be automatically extended so as to terminate one year from such Renewal Date unless, at least 120 days prior to the Renewal Date, either party shall give written notice to the other that the Employment Period shall not be so extended.

 

2. Terms of Employment.  (a) Position and Duties.  (i) During the Employment Period, the Executive shall serve the Company as its Chief Executive Officer and shall perform customary and appropriate duties as may be reasonably assigned to the Executive from time to time by the Board and shall provide services to the Partnership.  The Executive shall have such responsibilities, power and authority as those normally associated with such position in public companies of a similar stature.  The Executive shall report solely and directly to the Board.  The Executive shall perform his services at the principal offices of the Company in the Washington, DC metropolitan area and shall travel for business purposes to the extent reasonably necessary or appropriate in the performance of such services.  During the Employment Period, the Executive

 

 

shall, without compensation other than that herein provided, also serve and continue to serve, if and when elected and re-elected, as a member of the Board; provided that the Executive shall be appointed as a member of the Board effective as of the Effective Date.

 

(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive may be entitled, the Executive agrees to devote substantially all of his attention and time during normal business hours to the business and affairs of the Company and the Partnership and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.  During the Employment Period, it shall not be a violation of this Agreement for the Executive to serve on corporate (if approved by the Board, such approval not to be unreasonably withheld), civic or charitable boards or committees, deliver lectures, fulfill speaking engagements or teach at educational institutions and manage personal investments, so long as such activities do not materially interfere with the performance of the Executive’s responsibilities in accordance with this Agreement and the Executive complies with applicable provisions of the Company’s code of business conduct and ethics which are in effect from time to time and which have been provided to the Executive in writing.

 

(b) Compensation.  (i) Base Salary.  During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”) at the rate of $750,000.  The Executive’s Annual Base Salary shall be reviewed at least annually by the Compensation Committee of the Board (the “Committee”) pursuant to its normal performance review policies for senior executives.  The Committee may, but shall not be required to, increase the Annual Base Salary at any time for any reason.  The term “Annual Base Salary” as utilized in this Agreement shall refer to the Annual Base Salary as it may be so increased from time to time.  The Annual Base Salary shall not be reduced at any time, including after any such increase, and any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.

 

(ii) Annual Bonus.  In addition to the Annual Base Salary, the Executive shall be eligible to be awarded, for each fiscal year of the Company or portion of a fiscal year beginning on or after the Effective Date, an annual bonus (the “Annual Bonus”) pursuant to the terms of the Company’s annual incentive plan, as in effect from time to time, which shall not be inconsistent with the terms of this Agreement.  The target Annual Bonus shall be 200% of the rate of the Annual Base Salary (the “Target Bonus”).  The actual Annual Bonus may range from 0% to 300% of the rate of the Annual Based Salary, based upon the level of achievement of performance goals established by the Committee in consultation with the Executive (which performance goals shall be consistent with those applicable to the Company’s senior executives generally) and communicated to the Executive not later than the 90th day of the applicable fiscal year or, for the fiscal year ending December 31, 2014, not later than 90 days after the Effective Date, and may be increased from the amount produced by the application of the applicable performance criteria in the sole discretion of the Committee.  For the fiscal year which includes the Effective Date, the Annual Bonus shall be pro-rated based on the number of calendar days from March 15, 2014 through December 31, 2014 over 365.  Each Annual Bonus shall be paid in cash on the date on which annual bonuses are paid to senior executives of the Company generally, but not later than two and a half months after the end of the fiscal year for which the

 

2

 

Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus pursuant to an arrangement that meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

(iii) Long-Term Awards.  In addition to the long-term awards described in this Agreement, the Executive shall be eligible to participate in other long-term cash and equity incentive plans, practices, policies, and programs applicable generally to other senior executives of the Company.  The amount and terms of the Executive’s other long-term awards, if any, shall be determined by the Committee in its sole and absolute discretion; provided, that the Executive shall be treated no less favorably than other senior executives of the Company with respect to the grant and terms of such long-term awards.

 

(iv) Annual LTIP Awards.  (A) The Executive shall be granted long-term incentive plan units (“LTIP Units,” which are units of the Partnership which, following grant and vesting, are convertible on a one-for-one basis into shares of common stock of the Company or at the option of the Company an equivalent amount of cash) in respect of each fiscal year during the Employment Period, commencing with the fiscal year ending December 31, 2014 (the “Annual LTIP Award”).  Each Annual LTIP Award shall be granted pursuant to the Company’s 2014 Long Term Incentive Plan (the “Plan”), which shall be adopted no later than the Effective Date and the forms of Annual LTIP Awards thereunder shall be no less favorable to the Executive than the annual awards of LTIP Units to other senior executives of the Company.  The Annual LTIP Award in respect of any fiscal year shall be granted no later than promptly following the completion of audited financials for such fiscal year (and in any event no later than annual awards of LTIP Units or other equity-based compensation are granted to other senior executives of the Company in respect of such fiscal year), with the number of LTIP Units in each Annual LTIP Award being equal to the “Annual LTIP Award Cash Equivalent,” as defined below, in respect of such fiscal year, divided by the average closing price of the Company’s common stock on the primary exchange on which it trades (the “Closing Price”) for the final fifteen (15) trading days of the applicable fiscal year.  The “Annual LTIP Award Cash Equivalent” shall be an amount, not greater than $750,000, determined based on the achievement of total shareholder return (“TSR”) goals established by the Committee in consultation with the Executive not later than the 90th day of the applicable fiscal year; provided that the TSR goals for the fiscal year ending December 31, 2014 are included in Exhibit A attached hereto.  For the fiscal year ending December 31, 2014, the $750,000 shall be pro-rated based on the number of calendar days from March 15, 2014 through December 31, 2014 over 365.  LTIP Units granted as the Annual LTIP Award in respect of any fiscal year shall be subject to a three (3)-year post-grant service-based vesting schedule, with one-third (1/3) of such LTIP Units vesting on each of the first three annual anniversaries of the first day of the fiscal year following the fiscal year in respect of which granted provided the Executive remains employed with the Company on the applicable vesting date (other than as provided in this Agreement).  (For example, any LTIP Units awarded as the Annual LTIP Award in respect of the fiscal year ending December 31, 2014 shall be granted promptly following the completion of audited financials for such fiscal year (and in any event no later than annual awards of LTIP Units or other equity-based compensation are granted to other senior executives of the Company in respect of such fiscal year), and shall vest 1/3 on January 1 of each of 2016, 2017 and 2018, subject to continued service other than as provided in this Agreement.)  Distributions shall be paid on LTIP Units granted as Annual LTIP Awards

 

3

 

from and after the date of grant in accordance with the terms and conditions of the Plan and the applicable award agreement; provided that, there shall be no reduction to such distributions compared to distributions paid in respect of common units of the Partnership generally. Other than as stated in this paragraph, an Annual LTIP Award in respect of any fiscal year shall have terms and conditions substantially identical (and in any event no less favorable in any respect) to those applicable to LTIP Units generally granted to the Company’s other senior executives in respect of the same fiscal year, if any; provided, that, if there are no grants of LTIP Units to other senior executives of the Company in respect of the fiscal year in respect of which the Executive is granted an Annual LTIP Award, then the terms and conditions of the Annual LTIP Award for such fiscal year shall be no less favorable to the Executive than the terms and conditions of the Annual LTIP Award granted in respect of the fiscal year ending December 31, 2014.

 

(v) Inducement LTIP Units.  (A) Immediately following the twenty (20) consecutive trading days commencing on the Effective Date, the Executive shall be granted under the Plan a number of LTIP Units equal to $3,000,000 divided by the average Closing Price for the twenty (20) consecutive trading days commencing on the Effective Date (the “Inducement LTIP Units”).  Distributions will be paid on the Inducement LTIP Units from and after the date of grant in accordance with, and subject to, the terms and conditions of the Plan and the applicable award agreement; provided that, there shall be no reduction to such distributions compared to distributions paid in respect of common units of the Partnership generally.

 

(B) Other than as provided in this Agreement, twenty-five percent (25%) of the Inducement LTIP Units will become vested on each of the first four anniversaries of the Effective Date if the Executive is continually employed hereunder through such date.

 

(C) If this Agreement and the Executive’s employment terminates on the last day of the Employment Period due to the Company giving a notice of non-renewal in accordance with Section 1 and the Executive has been continually employed hereunder through the third (3rd) anniversary of the Effective Date, then the remaining unvested Inducement LTIP Units shall vest on the fourth (4rd) anniversary of the Effective Date if the Executive executes and does not revoke, by the “Release Deadline” (as defined in Section 4), the Release attached hereto as Exhibit B.

 

(vi) Special Performance LTIP Units. (A) Subject to the Executive’s continuous employment hereunder through each grant date, the Executive shall be granted additional LTIP Units under the Plan in respect of each performance period (each, a “Special Performance Period”) consisting of the period from the Effective Date through (i) December 31, 2015 (the “First Special PP”), (ii) December 31, 2016 (the “Second Special PP”) and (iii) December 31, 2017 (the “Third Special PP”) (collectively, the “Special Performance LTIP Units”).

 

(B)  The Special Performance LTIP Units in respect of each Special Performance Period shall be granted promptly (and in any event within 15 days) following the end thereof.  The number of Special Performance LTIP Units granted in respect of each Special Performance Period shall be the “Performance LTIP Unit Cash Equivalent,” as defined below, in respect of the Performance Period divided by the average Closing Price for the twenty (20) consecutive trading days commencing on the Effective Date.

 

4

 

(C)  The Performance LTIP Unit Cash Equivalent for the First Special PP shall be an amount, not greater than $2,000,000, determined based on the achievement of the absolute and relative (versus the MSCI REIT Index) TSR goals in respect of the First Special PP included in Exhibit A attached hereto.  The Performance LTIP Unit Cash Equivalent for each of the Second Special PP and the Third Special PP shall be an amount, not greater than $1,500,000, determined based on the achievement of the absolute and relative (versus the MSCI REIT Index) TSR goals (weighted 40% and 60% respectively) in respect of the Second Special PP and the Third Special PP, respectively, in each case included in Exhibit A attached hereto.

 

(D)  Distributions will be paid on Special Performance LTIP Units from and after the date of grant in accordance with, and subject to, the terms and conditions of the Plan and the applicable award agreement; provided that, there shall be no reduction to such distributions compared to distributions paid in respect of common units of the Partnership generally.

 

(E)  Other than as provided in this Agreement, Special Performance LTIP Units granted in respect of the First Special PP and the Second Special PP will become vested on the third (3rd) anniversary of the Effective Date if the Executive is continually employed hereunder through such date.

 

(F)  Other than as provided in this Agreement, Special Performance LTIP Units granted in respect of the Third Special PP will be immediately vested upon grant if the Executive is continually employed hereunder through the grant date.

 

(vii) Welfare Benefits.  The Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in, and shall receive benefits under, welfare benefit plans, practices, policies and programs provided by the Company to the same extent as provided generally to senior executives of the Company.  In addition, during the Employment Period and to the extent it does not result in tax or other penalties to the Company, the Executive and his eligible dependents shall be entitled to an executive medical and dental insurance plan providing supplemental first-dollar coverage for the Executive and his eligible dependents for those items not covered under the Company’s general health plan (for example, prescriptions, orthodontia, eye surgery or other coverage which may be excluded from the group medical plan), at the expense of the Company.

 

(viii) Fringe Benefits.  During the Employment Period, the Executive shall be entitled to fringe benefits in accordance with the plans, practices, programs and policies of the Company in effect for other senior executives of the Company.  The Company reserves the right to amend or cancel any such plan, practice, policy or program in its sole discretion, subject to the terms of such plan, practice, policy or program and applicable law; provided, that no such amendment or cancellation shall be more adverse to the Executive than to other senior executives of the Company. Notwithstanding the foregoing, the Executive shall be entitled to first class travel and accommodations when traveling for Company business.

 

(ix) Vacation.  During the Employment Period, the Executive shall be entitled to receive no less than four weeks paid vacation per year.

 

5

 

(x) Indemnification.  During and following the Employment Period, the Company shall fully indemnify the Executive for any liability to the fullest extent permitted under applicable state law.  In addition, the Company agrees to continue and maintain, at the Company’s sole expense, a directors’ and officers’ liability insurance policy covering the Executive both during and, while potential liability exists, after the Employment Period that is no less favorable than the policy covering active directors and senior officers of the Company from time to time.

 

(xi) Expenses.  During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all business expenses incurred by the Executive in accordance with the Company’s business expense reimbursement policies or as approved by the Board or Audit Committee.

 

(xii) Other Benefits.  During the Employment Period, the Executive shall be entitled to participate in all executive and employee benefit plans and programs of the Company on the same basis as provided generally to other senior executives of the Company.  The Company reserves the right to amend or cancel any such plan or program in its sole discretion, subject to the terms of such plan or program and applicable law.

 

3. Termination of Employment.  (a) Death or Disability.  The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period.  If the Disability (as defined below) of the Executive has occurred during the Employment Period, the Company may provide the Executive with written notice in accordance with Section 11(b) of this Agreement of its intention to terminate the Executive’s employment.  In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the thirty (30) days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties.  For purposes of this Agreement, “Disability” shall mean the “permanent and total disability” of the Executive as defined in Section 22(e)(3) of the Code, or any successor provision thereto.

 

(b) With or Without Cause.  The Company may terminate the Executive’s employment during the Employment Period either with or without Cause.  For purposes of this Agreement, “Cause” shall mean:

 

(i) The Executive’s willful failure to perform or substantially perform the Executive’s material duties with the Company;

 

(ii) Illegal conduct or gross misconduct by the Executive that is willful and demonstrably and materially injurious to the Company’s business, financial condition or reputation;

 

(iii) A willful and material breach by the Executive of the Executive’s obligations under this Agreement, including without limitation a material and willful breach of the restrictive covenants and confidentiality provisions set forth in Section 8 of the Agreement; or

 

6

 

(iv) The Executive’s conviction of, or entry of a plea of guilty or nolo contendere with respect to, a felony crime or a crime involving moral turpitude, fraud, forgery, embezzlement or similar conduct.

 

provided, however, that the actions in (i) and (iii) above will not be considered Cause unless the Executive has failed to cure such actions within 30 days of receiving written notice specifying, with particularity, the events allegedly giving rise to Cause and, further provided, that such actions will not be considered Cause unless the Company provides such written notice within 90 days of any member of the Board (excluding the Executive, if applicable at the time of such notice) having knowledge of the relevant action.  Further, no act or failure to act by the Executive will be deemed “willful” unless done or omitted to be done not in good faith or without reasonable belief that such action or omission was in the Company’s best interests, and any act or omission by the Executive pursuant to authority given pursuant to a resolution duly adopted by the Board or on the advice of counsel for the Company will be deemed made in good faith and in the best interests of the Company.  The Executive will not be deemed to be discharged for Cause unless and until there is delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than two thirds (2/3) of the entire membership of the Board (excluding the Executive, if he is then a member of the Board), at a meeting called and duly held for such purpose (after reasonable notice to Executive and an opportunity for the Executive and the Executive’s counsel to be heard before the Board), finding in good faith that Executive is guilty of the conduct set forth above and specifying the particulars thereof in detail.

 

(c) Good Reason; Voluntary Termination.  The Executive’s employment may be terminated by the Executive for Good Reason or voluntarily without Good Reason.  “Good Reason” means the occurrence of any one of the following events without the prior written consent of Executive:

 

(i) A material diminution of the Executive’s duties or responsibilities, authorities, powers or functions (including removal, without Cause, from the Board, failure to be nominated to the Board, ceasing to be the Company’s Chief Executive Officer or assignment of duties inconsistent with the Chief Executive Officer position);

 

(ii) A relocation that would result in the Executive’s principal location of employment being moved 35 miles or more away from that described in Section 2(a)(i) and, as a result, the Executive’s commute increasing by 35 miles or more; or

 

(iii) Any material breach of this Agreement by the Company, including without limitation any material breach of the LTIP award agreements or the Executive being required to report other than solely and directly to the Board.

 

provided, however, that the actions in (i) through (iii) above will not be considered Good Reason unless the Executive shall describe the basis for the occurrence of the Good Reason event in reasonable detail in a Notice of Termination (as defined below) provided to the Company in writing within 60 days of the Executive’s knowledge of the actions giving rise to the Good Reason, and the Company has failed to cure such actions within 30 days of receiving such Notice of Termination (and if the Company does effect a cure within that period, such Notice of

 

7

 

Termination shall be ineffective).  Unless the Executive gives the Company a Notice of Termination (as defined below) for Good Reason within 120 days of the initial existence of any event which, after any applicable notice and the lapse of any applicable 30-day grace period, would constitute Good Reason, such event will cease to be an event constituting Good Reason.

 

(d) Notice of Termination.  Any termination of employment by the Company or the Executive shall be communicated by a Notice of Termination (as defined below) to the other party hereto given in accordance with Section 11(b) of this Agreement.  For purposes of this Agreement, a “Notice of Termination” shall mean a written notice that (i) indicates the termination provision in this Agreement relied upon and (ii) specifies the Date of Termination (as defined below) if other than the date of receipt of such notice.  The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive, respectively, hereunder or preclude the Company or the Executive, respectively, from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.

 

(e) Date of Termination.  “Date of Termination” shall mean (i) if the Executive’s employment is terminated by the Company for Cause or other than for Cause, death or Disability, the date of receipt of the Notice of Termination or any later date specified therein (which date shall not be more than thirty (30) days after the giving of such notice), (ii) if the Executive’s employment is terminated by reason of death or by the Company for Disability, the date of death of the Executive or the Disability Effective Date, as the case may be, or (iii) if the Executive’s employment is terminated by the Executive for Good Reason or without Good Reason, thirty (30) days from the date of the Company’s receipt of the Notice of Termination, or such later date as is mutually agreed by the Company and the Executive (subject to the Company’s right, if applicable, to cure the Good Reason event).  Notwithstanding the foregoing, in no event shall the Date of Termination occur until the Executive experiences a “separation from service” within the meaning of Section 409A of the Code and, notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the “Date of Termination.”

 

4. Obligations of the Company upon Termination.  (a) By the Company Other Than for Cause, Death or Disability; By the Executive for Good Reason.  Subject to Section 5, if, during the Employment Period, (x) the Company shall terminate the Executive’s employment other than for Cause, death or Disability or (y) the Executive shall terminate employment for Good Reason: the Company shall pay and provide to the Executive the following amounts and benefits:

 

(i) a lump sum cash payment within 30 days after the Date of Termination equal to the aggregate of the following amounts: (1) the Executive’s Annual Base Salary and vacation pay through the Date of Termination, (2) the Executive’s accrued Annual Bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs (other than any portion of such Annual Bonus that was previously deferred, which portion shall instead be paid in accordance with the applicable deferral election) if such bonus has not been paid as of the Date of Termination, and (3) the Executive’s business

 

8

 

expenses that have not been reimbursed by the Company as of the Date of Termination that were incurred by the Executive prior to the Date of Termination in accordance with the applicable Company policy, in the case of each of clauses (1) through (3), to the extent not previously paid (the sum of the amounts described in clauses (1) through (3) shall be hereinafter referred to as the “Accrued Obligations”); and

 

(ii) subject to the Executive’s delivery (and non-revocation) of an executed release of claims against the Company and its officers, directors, employees and affiliates in substantially the form attached hereto as Exhibit B (the “Release”), which Release must be delivered to the Company and the period in which it may be revoked expired not later than thirty 30 days after the Date of Termination (the “Release Deadline”):

 

(A) an amount equal to two times the sum of (x) the Executive’s Annual Base Salary and (y) the Executive’s Target Bonus as in effect for the fiscal year of the Company in which the Date of Termination occurs, payable in a lump sum on the fifth business day following the Release Deadline;

 

(B) to the extent permitted by the Company’s group health insurance carrier and as would not cause the Company to incur tax or other penalties, the Executive shall be allowed to purchase, on an after-tax basis, group health benefits otherwise offered by the Company to its active employees generally until the Executive attains, or in the case of his death, would have attained, the age of 65 (but as to his children, only through their attainment of age 26).  The receipt of such health care benefits shall be conditioned upon the Executive making a timely election to receive COBRA coverage provided to former employees under Section 4980B of the Code and continuing such coverage for so long as it may be available, and thereafter continuing to pay an amount equal to the monthly COBRA premium as in effect at the Company from time to time in respect of the applicable level of coverage.  If Executive allows such coverage to lapse by not paying the applicable amount, such coverage may not thereafter be reinstated (the benefits provided pursuant to this Section 4(a)(ii)(B), the “Post-Employment Health Care Benefits”);

 

(C) full vesting of any outstanding Inducement LTIP Units, Annual LTIP Awards and Special Performance LTIP Units and waiver of any service-based vesting conditions on any other outstanding equity-based or long-term performance awards.  For any current performance periods (the current fiscal year in the case of Annual LTIP Awards and each current Special Performance Period in the case of Special Performance LTIP Units), or completed performance periods as to which grants of LTIP Units have not been made by the Date of Termination, Annual LTIP Awards and Special Performance LTIP Units, if any, shall be (A) granted on the fifth business day following the Release Deadline based (I) as to current performance periods, on actual performance through the Date of Termination (projected to the end of the applicable performance period for absolute, but not for relative, performance goals), with the amount earned not pro-rated for the partial completion of any performance period, and (II) as to completed performance periods as to which grants of LTIP Units have not been made by the Date of Termination, on actual performance through the end of any

 

9

 

such performance period, with the amount earned not pro-rated, and (B) vested without regard to any applicable service vesting condition when granted (the “Equity Award Vesting Benefits”); and

 

(iii) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or that the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies through the Date of Termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

 

Notwithstanding the foregoing provisions of Section 4(a), in the event that the Executive is a “specified employee” (within the meaning of Section 409A of the Code and with such classification to be determined in accordance with the methodology established by the applicable employer) (a “Specified Employee”), amounts and benefits (other than the Accrued Obligations) that are deferred compensation (within the meaning of Section 409A of the Code) that would otherwise be payable or provided under Section 4(a) during the six-month period immediately following the Date of Termination shall instead be paid, with interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”), on the first business day after the earlier of (i) the date of the Executive’s death and (ii) the date that is six months following the Date of Termination (the “409A Payment Date”).  For the avoidance of doubt, the parties hereto acknowledge that the severance payments and benefits described in this Agreement are intended to be exempt from the operation of Section 409A of the Code and not “deferred compensation” within the meaning of Section 409A.

 

(b) Death.  If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than (i) payment of Accrued Obligations, (ii) the Other Benefits and (iii) the Equity Award Vesting Benefits and the Post-Employment Health Care Benefits.  The Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days of the Date of Termination.  The term “Other Benefits” as utilized in this Section 4(b) shall include death benefits as in effect on the date of the Executive’s death with respect to senior executives of the Company.

 

(c) Disability.  If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, the Company shall provide the Executive with (i) the Accrued Obligations and the Post-Employment Health Care Benefits, (ii) the Other Benefits and (iii) subject to the Executive’s delivery of an executed Release prior to the Release Deadline (and non-revocation thereof), the Equity Award Vesting Benefits, and shall have no other severance obligations under this Agreement.  The Accrued Obligations shall be paid to the Executive in a lump-sum in cash within thirty (30) days of the Date of Termination.  The term “Other Benefits”, as utilized in this Section 4(c), shall include short-term and long-term disability benefits as in effect on the date of the Executive’s Disability with respect to senior executives of the Company.

 

10

 

(d) By the Company for Cause; By the Executive Without Good Reason.  If the Executive’s employment shall be terminated by the Company for Cause, by the Executive without Good Reason, or on the last day of the Employment Period due to either party giving a notice of non-renewal in accordance with Section 1, except as otherwise provided herein this Agreement shall terminate without further obligations to the Executive other than the obligation to provide the Executive with (i) the Accrued Obligations and, if such termination is not by the Company for Cause, the Post-Employment Health Care Benefits and (ii) the Other Benefits; provided, however, that if the Executive’s employment shall be terminated by the Company for Cause, the term “Accrued Obligations” shall not be deemed to include the Executive’s Annual Bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs.  The Accrued Obligations shall be paid to the Executive in a lump sum in cash within thirty (30) days of the Date of Termination.

 

5. Change in Control.  (a)  In the event of a Change in Control (as defined in Exhibit C attached hereto) during the Employment Period, performance in respect of Annual LTIP Awards and Special Performance LTIP Units for any performance periods in effect as of the Change in Control (the current fiscal year in the case of Annual LTIP Award and each current Special Performance Period in the case of Special Performance LTIP Units) shall be based on actual performance measured as of the Change in Control (projected to the end of the applicable performance period for absolute, but not for relative, performance goals), and such awards otherwise shall remain outstanding in accordance with their terms and this Agreement.

 

(b)  In the event that during the Employment Period, the Executive’s employment is terminated by the Company other than for Cause, death or Disability, or by the Executive for Good Reason either (x) before a Change in Control (as defined in the Plan) but after a definitive agreement is executed the consummation of which would result in a Change in Control, and such termination arose in connection with or anticipation of such Change in Control, or (y) upon or within two (2) years after a Change in Control, then the Company shall pay and provide to the Executive, as applicable, in lieu of the payments and benefits described in Section 4, within thirty (30) days following the Date of Termination (except as set forth in item (v)):

 

(i) the Accrued Obligations;

 

(ii) a lump sum payment equal to the sum of two (2) times the sum of (i) the Executive’s Annual Base Salary and (ii) the greater of (A) the Executive’s Target Bonus as in effect for the fiscal year of the Company in which the Date of Termination occurs and (B) the Executive’s Target Bonus as in effect for the fiscal year of the Company in which the Change in Control occurs;

 

(iii) the Post-Employment Health Care Benefits;

 

(iv) full vesting as of the Date of Termination of any outstanding Inducement LTIP Units, Annual LTIP Awards and Special Performance LTIP Units and waiver of any service-based vesting conditions on any other outstanding equity-based or long-term performance awards;

 

11

 

(v) Notwithstanding Section 5(a), for any performance periods in effect as of the Date of Termination (the current fiscal year in the case of Annual LTIP Award and each current Special Performance Period in the case of Special Performance LTIP Units), or completed performance periods as to which grants of LTIP Units have not been made by the Date of Termination, Annual LTIP Awards and Special Performance LTIP Units, if any, shall be (A) granted on the fifth business day following the Date of Termination based (I) as to current performance periods, on actual performance measured as of the earlier of Date of Termination or Change in Control (projected to the end of the applicable performance period for absolute, but not for relative, performance goals), with the amount earned not pro-rated for the partial completion of any performance period, and (II) as to completed performance periods as to which grants of LTIP Units have not been made by the Date of Termination, on actual performance through the end of any such performance period, with the amount earned not pro-rated, and (B) vested without regard to any applicable service vesting condition when granted; and

 

(vi) the Other Benefits.

 

Notwithstanding the foregoing provisions of this Section 5(b), in the event that the Executive is a Specified Employee, amounts and benefits that are deferred compensation (within the meaning of Section 409A of the Code) that would otherwise be payable or provided under this Section 5 (other than the Accrued Obligations) during the six-month period immediately following the Date of Termination shall instead be paid, with Interest, on the 409A Payment Date.  For the avoidance of doubt, the parties hereto acknowledge that the payments and benefits described in this Section 5 are intended to be exempt from the operation of Section 409A of the Code and not “deferred compensation” within the meaning of Section 409A.

 

6. Non-exclusivity of Rights.  Except as specifically provided, nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive qualifies pursuant to its terms, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies.  Amounts that are vested benefits or that the Executive is otherwise entitled to receive pursuant to the terms of any plan, program, policy or practice of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, program, policy or practice or contract or agreement except as explicitly modified by this Agreement.

 

7. No Mitigation; Legal Fees.  (a) In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced or otherwise subject to offset in any manner, regardless of whether the Executive obtains other employment.

 

(b) In the event of any contest by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of

 

12

 

performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement) (each, a “Contest”) the Company agrees to reimburse the Executive, to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur at any time from the Effective Date of this Agreement through the Executive’s remaining lifetime (or, if longer, through the 20th anniversary of the Effective Date) as a result of such Contest; provided, however, that (i) if such Contest is initiated on or after a Change in Control, or a Change in Control occurs during the pendency of such Contest, reimbursement of such fees and expenses will not be provided only to the extent that the Executive is found pursuant to a judgment, decree or order of a court of competent jurisdiction, in accordance with the dispute resolution procedures in Section 11(a), to not have acted in good faith in bringing or defending the relevant action, and (ii) if such Contest is initiated prior to a Change in Control and a Change in Control does not occur during the pendency of such Contest, reimbursement of such fees and expenses shall be provided only if the Executive substantially prevails on at least one substantive issue in such Contest.  In order to comply with Section 409A of the Code, in no event shall the payments by the Company under this Section 7(b) be made later than the end of the calendar year next following the calendar year in which such Contest is finally resolved, provided, that the Executive shall have submitted an invoice for such fees and expenses at least 10 days before the end of the calendar year next following the calendar year in which such Contest is finally resolved.  The amount of such legal fees and expenses that the Company is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Company is obligated to pay in any other calendar year, and the Executive’s right to have the Company pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

 

(c) The Company agrees to pay directly to the Executive’s attorneys and advisors up to $50,000 in respect of attorneys’ and other outside advisors’ fees incurred by the Executive with respect to the preparation of this Agreement (and all term sheets and other employment arrangements prepared in connection therewith), provided, that the Executive shall have submitted an invoice for such fees not later than 60 days after the Effective Date and the Company shall make such payment within 10 business days following the Company’s receipt of an invoice from the Executive, but in any event not later than two and one-half (2 1/2) months after the end of the current calendar year.  The amount of such fees that the Company is obligated to pay in any given calendar year shall not affect the fees that the Company is obligated to pay in any other calendar year, and the Executive’s right to have the Company pay such fees may not be liquidated or exchanged for any other benefit.

 

8. Restrictive Covenants.  (a) Confidential Information.  During the Employment Period and thereafter, the Executive shall keep secret and retain in the strictest confidence, and shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, including without limitation, any data, information, ideas, knowledge and papers pertaining to the customers, prospective customers, prospective products or business methods of the Company, including without limitation the business methods, plans and procedures of the Company, that shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and that shall not be or become public knowledge (other than by acts by the Executive or representatives of the

 

13

 

Executive in violation of this Agreement).  After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process after reasonable advance written notice to the Company, use communicate or divulge any such information, knowledge or data, directly or indirectly, to anyone other than the Company and those designated by it.  Nothing contained in this Agreement shall prohibit the Executive from disclosing or using information (i) which is now known by or hereafter becomes available to the general public through non-confidential sources; (ii) which became known to the Executive from a source other than Company, or any of its subsidiaries or affiliates, other than as a result of a breach (known or which should have been known to the Executive) by such source of an obligation of confidentiality owed by it to Company,  or any of its subsidiaries or affiliates (but not if such information was known by the Executive at such time of disclosure or use to be confidential); (iii) in connection with the proper performance of his duties hereunder, (iv) which is otherwise legally required (but only if the Executive gives reasonable advance notice to the Company of such disclosure obligation to the extent legally permitted, and cooperates with the Company (at the Company’s expense), if requested, in resisting such disclosure) or (v) which is reasonably appropriate in connection with a litigation or arbitration related to this Agreement or an LTIP Award.

 

(b) Non-competition. During the period commencing on the Effective Date and ending on the first anniversary of the Date of Termination (the “Covenant Period”), the Executive shall not engage in, have an interest in, or otherwise be employed by or, as an owner, operator, partner, member, manager, employee, officer, director, consultant, advisor, lender, or representative, associate with, or permit his name to be used in connection with the activities of, any business or organization engaged in the ownership, development, management, leasing, expansion or acquisition of indoor or outdoor shopping centers or malls (the “Business”) , in (x) in North America or (y)  any country outside of North America in which the Company or any of its affiliates is engaged in the ownership, development, management, leasing, expansion or acquisition of indoor or outdoor shopping centers or malls , or has indicated an intent to do so or interest in doing so as evidenced by a written plan or proposal prepared by or presented to senior management of the Company prior to the Date of Termination; other than for or on behalf of, or at the request of, the Company or any affiliate; provided, that passive ownership of less than two percent (2%) of the outstanding stock of any publicly traded corporation (or private company through an investment in a hedge fund or private equity fund, or similar vehicle) shall not be deemed to be a violation of this Section 8(b) solely by reason thereof.  Notwithstanding the foregoing, the provisions of this Section 8(b) shall not be violated by the Executive being employed by, associating with or otherwise providing services to a subsidiary, division or unit of any entity where such entity has a subsidiary, division or unit (other than the subsidiary, division or unit with which the Executive is employed, associated with or otherwise provides services to) which is engaged in the Business so long as the Executive does not provide services or advice, with or without specific compensation, to the subsidiary, division or unit engaged in the Business.

 

(c) Non-solicitation of Employees.  During the Covenant Period, the Executive shall not, directly or indirectly, (i) induce or attempt to induce any employee of the Company to leave the employ of the Company or in any way interfere with the relationship between the Company, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an

 

14

 

employee of the Company until six (6) months after such individual’s employment relationship with the Company has been terminated or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company to cease doing business with the Company, or in any way knowingly interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company, on the other hand; provided, that solicitations incidental to general advertising or other general solicitations in the ordinary course not specifically targeted at such persons and employment of any person not otherwise solicited in violation hereof shall not be considered a violation of this Section 8(c). The Executive shall not be in violation of this Section 8(c) solely by providing a reference for a former employee of the Company.

 

(d) Non-Disparagement. The Executive agrees not to make any public disparaging, negative, or defamatory comments about the Company including the Company’s business, its directors, officers, employees, parents, subsidiaries, partners, affiliates, operating divisions, representatives or agents, or any of them, whether written, oral, or electronic.  In particular, the Executive agrees to make no public statements including, but not limited to, press releases, statements to journalists, employees, prospective employers, interviews, editorials, commentaries, speeches or conversations, that disparage or may disparage the Company’s business, are critical of the Company or its business, or would cast the Company or its business in a negative light.  In addition to the confidentiality requirements set forth in this Agreement and those imposed by law, the Executive further agrees not to provide any third party, directly or indirectly, with any documents, papers, recordings, e-mail, internet postings, or other written or recorded communications referring or relating the Company’s business, that would support, directly or indirectly, any disparaging, negative or defamatory statement, whether written or oral. This Section 8(d) shall not be violated by (i) responding publicly to incorrect, disparaging, or derogatory public statements to the extent reasonably necessary to correct or refute such public statements or (ii) making any truthful statement to the extent (y) reasonably necessary in connection with any litigation, arbitration, or mediation or (z) required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with apparent jurisdiction to order the person to disclose or make accessible such information.  The Company agrees not to make any public statement which is disparaging or defamatory about the Executive, whether written, oral, or electronic.  The Company’s obligations under the preceding sentence shall be limited to communications by its senior corporate executives having the rank of Senior Vice President or above and any member of the Board (“Specified Executives”), and it is agreed and understood that any such communication by any Specified Executive (or by any executive at the behest of a Specified Executive) shall be deemed to be a breach of this Section 8(d) by the Company.

 

(e) Prior Notice Required.  The Executive hereby agrees that, prior to accepting employment with any other person or entity during the Covenant Period, the Executive will provide such prospective employer with written notice of the provisions of this Agreement, with a copy of such notice delivered simultaneously to the General Counsel of the Company.

 

(e) Return Of Company Property/Passwords.  The Executive hereby expressly covenants and agrees that following termination of the Executive’s employment with the Company for any reason or at any time upon the Company’s written request, the Executive will

 

15

 

promptly return to the Company all property of the Company in his possession or control (whether maintained at his office, home or elsewhere), including, without limitation, all Company passwords, credit cards, keys, beepers, laptop computers, cell phones and all copies of all management studies, business or strategic plans, budgets, notebooks and other printed, typed or written materials, documents, diaries, calendars and data of or relating to the Company or its personnel or affairs.  Notwithstanding the foregoing, the Executive shall be permitted to retain his rolodex (or similar list of personal contacts), compensation-related data, information needed for tax purposes and other personal items.

 

(f) Executive Covenants Generally.

 

(i) The Executive’s covenants as set forth in this Section 8 are from time to time referred to herein as the “Executive Covenants.” If any of the Executive Covenants is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such Executive Covenant shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining Executive Covenants shall not be affected thereby; provided, however, that if any of the Executive Covenants is finally held to be invalid, illegal or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such Executive Covenant will be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder.

 

(ii) The Executive understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company and its controlled affiliates, but the Executive nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and ability), the Executive does not believe would prevent his from otherwise earning a living.  The Executive has carefully considered the nature and extent of the restrictions place upon his by this Section 8, and hereby acknowledges and agrees that the same are reasonable in time and territory and do not confer a benefit upon the Company disproportionate to the detriment of the Executive.

 

(g) Enforcement.  Because the Executive’s services are unique and because the Executive has access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Section 8.  Therefore, in the event of a breach or threatened breach of this Section 8, the Company or its respective successors or assigns may, in addition to other rights and remedies existing in their favor at law or in equity, apply to any court of competent jurisdiction for specific performance and/or injunctive relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security) or require the Executive to account for and pay over to the Company all compensation, profits, moneys, accruals or other benefits derived from or received as a result of any transactions constituting a breach of the covenants contained herein, if and when final judgment of a court of competent jurisdiction is so entered against the Executive.

 

16

 

(h) Interpretation.  For purposes of this Section 8, references to “the Company” shall mean the Company as hereinbefore defined and any of its controlled affiliated companies.

 

9.  Golden Parachute Excise Tax Modified Cutback.  Anything in this Agreement to the contrary notwithstanding, in the event an independent, nationally recognized accounting firm as shall be designated by the Company with the Executive’s consent (which shall not be unreasonably withheld) (the “Accounting Firm”) shall determine that receipt of all payments or distributions by the Company, the person effectuating a change in control of the Company or any companies affiliated with either of them in the nature of compensation to or for the Executive’s benefit, whether paid or payable pursuant to this Agreement or otherwise (a “Payment”), would subject the Executive to the excise tax under Section 4999 of the Code, the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to this Agreement (the “Agreement Payments”) to the “Reduced Amount” (as defined below).  The Agreement Payments shall be reduced to the “Reduced Amount” only if the Accounting Firm determines that the Executive would have a greater “Net After-Tax Receipt” (as defined below) of aggregate Payments if the Executive’s Agreement Payments were reduced to the Reduced Amount.  If the Accounting Firm determines that the Executive would not have a greater Net After-Tax Receipt of aggregate Payments if the Executive’s Agreement Payments were so reduced, the Executive shall receive all Agreement Payments to which the Executive is entitled under this Agreement.

 

The Accounting Firm shall provide a written report of its determinations hereunder, including detailed supporting calculations.  If the Accounting Firm determines that aggregate Agreement Payments should be reduced to the Reduced Amount, it shall promptly notify the Company and the Executive in writing to that effect. In the absence of manifest error, all determinations made by the Accounting Firm under this Section 9 shall be binding upon the Company and the Executive and shall be made as soon as reasonably practicable and in no event later than fifteen (15) days following the later of the Date of Termination or the date of the transaction which causes the application of Section 280G of the Code.  For purposes of reducing the Agreement Payments to the Reduced Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced.  The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits under the following sections in the following order: 5(b)(ii), 5(b)(iv) (as it applies to Special Performance LTIPs) and 5(b)(iv) (as it applies to Inducement LTIP Units).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.

 

As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement which should not have been so paid or distributed (“Overpayment”) or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder.  In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or the Executive which the Accounting Firm believes has a high probability of success determines that an Overpayment has been made,

 

17

 

the Executive shall pay any such Overpayment to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Executive to the Company if and to the extent such payment would not either reduce the amount on which the Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes.  In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be paid promptly (and in no event later than 60 days following the date on which the Underpayment is determined) by the Company to or for the benefit of the Executive together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

 

For purposes hereof, the following terms have the meanings set forth below:

 

“Reduced Amount” shall mean the greatest amount of Agreement Payments that can be paid that would not result in the imposition of the excise tax under Section 4999 of the Code if the Accounting Firm determines to reduce Agreement Payments pursuant to the first paragraph of this Section 9.

 

“Net After-Tax Receipt” shall mean the present value (as determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a Payment net of all taxes imposed on the Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws (and including any employment, social security or Medicare taxes, and other taxes (including any other excise taxes)), determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied (or is likely to apply) to the Executive’s taxable income for the tax year in which the change in control occurs, or such other rate(s) as the Accounting Firm determines to be likely to apply to the Executive in the relevant tax year(s) in which any Payment is expected to be made .

 

To the extent requested by the Executive, the Company shall cooperate with the Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by the Executive (including without limitation, the Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant) before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code.

 

10. Successors.  (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

 

18

 

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.  As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

 

11. Miscellaneous.  (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, without reference to principles of conflict of laws.  Venue for a dispute in respect of this Agreement shall be the federal courts located in Washington, D.C.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.  This Agreement shall supersede and replace any other agreement between the parties with respect to the subject matter hereof in effect immediately prior to the execution of this Agreement, and the Executive shall not be entitled to any severance pay or benefits under any other severance plan, program or policy of the Company and the affiliated companies.

 

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

19

 

	
If to the Executive:
    	
 
    	
At the most recent address  on file at the Company.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
With a copy to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Katzke & Morgenbesser LLP
    1345 Avenue of the Americas
    New York, New York 10105
    Attention: Michael S. Katzke, Esq.
    
	
 
    	
 
    	
 
    
	
If to the Company:
    	
 
    	
Washington Prime Group, Inc.

[ADDRESS OF EXECUTIVE OFFICES, TO BE PROVIDED WHEN   KNOWN]
    
	
 
    	
 
    	
Attention: General Counsel
    

 

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

 

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

 

(d) The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

 

(f) Any provision of this Agreement that by its terms continues after the expiration of the Employment Period or the termination of the Executive’s employment shall survive in accordance with its terms.

 

(g) The Agreement is intended to comply with the requirements of Section 409A of the Code or an exemption or exclusion therefrom and shall in all respects be administered in accordance with Section 409A of the Code.  The Company and the Executive mutually intend to structure the payments and benefits described in this Agreement, and the Executive’s other compensation, to be exempt from or to comply with the requirements of Section 409A of the Code to the extent applicable.  Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of the Code.  In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement.  If the Executive dies following the Date of Termination and prior to the payment of the any amounts delayed on account of Section 409A of the Code, such amounts shall be paid to the personal representative of the Executive’s estate within 30 days after the date of the Executive’s death.

 

20

 

All reimbursements and in-kind benefits provided under this Agreement that constitute deferred compensation within the meaning of Section 409A shall be made or provided in accordance with the requirements of Section 409A of the Code, including, without limitation, that (i) in no event shall reimbursements by the Company under this Agreement be made later than the end of the calendar year next following the calendar year in which the applicable fees and expenses were incurred, provided, that the Executive shall have submitted an invoice for such fees and expenses at least 10 days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred; (ii) the amount of in-kind benefits and the Company is obligated to pay or provide in any given calendar year shall not affect the in-kind benefits that the Company is obligated to pay or provide in any other calendar year; (iii) the Executive’s right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit; and (iv) in no event shall the Company’s obligations to make such reimbursements or to provide such in-kind benefits apply later than the Executive’s remaining lifetime (or if longer, through the 20th anniversary of the Effective Date).  Prior to a Change in Control, but within the time period permitted by the applicable Treasury Regulations, the Company may, in consultation with the Executive, modify the Agreement, in the least restrictive manner necessary and without any diminution in the value of the payments to the Executive, in order to cause the provisions of the Agreement to comply with the requirements of Section 409A of the Code, so as to avoid the imposition of taxes and penalties on the Executive pursuant to Section 409A of the Code. For purposes of this Agreement, the term “Section 409A of the Code” shall include the implementing regulations thereunder.

 

12.  Recoupment.  (a)  In the event of a restatement of the Company’s consolidated financial statements, the Board shall have the right to take appropriate action to recoup from the Executive any portion of any bonus and other equity or non-equity compensation received by the Executive the payment, grant or vesting of which was tied to the achievement of one or more specific performance targets, which bonus or other compensation would not have been paid, granted or vested if based on the restated financial statements for the applicable period; provided, that such actions are commensurate with those actions taken with respect to other senior executives of the Company who are or were similarly situated.  This Section 12(a) shall become ineffective at such time as the Company adopts a clawback policy pursuant to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) which applies to the Executive.  Any amounts required to be repaid hereunder shall be adjusted to take into account any taxes that the Executive has already paid.  The Company shall be permitted to request any recoupment at any time within the Employment Period or for three (3) years thereafter (unless a longer period is required pursuant to Dodd-Frank).

 

(b) In the event the Company is entitled to, and seeks, recoupment under this Section 12, the Executive shall no later than sixty (60) days following the request reimburse the amounts which the Company is entitled to recoup hereunder.  If the Executive fails to pay such reimbursement, to the extent permitted by applicable law and not in violation of Section 409A of the Code, the Company shall have the right to (i) deduct the amount to be reimbursed hereunder from the compensation or other payments due to the Executive from the Company or (ii) take any other appropriate action to recoup such payments.  The Executive acknowledges that the Company does not waive its right to seek recoupment of any amounts as described under this

 

21

 

Section 12 for failure to demand repayment or reduce the payments made to the Executive.  Any such waiver must be done in a writing that is signed by both the Company and the Executive.

 

(c) The rights contained in this Section 12 shall be in addition to, and shall not limit, any other rights or remedies that the Company may have under law or in equity.

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

 

	
 
    	
MARK ORDAN
    
	
 
    	
 
    
	
 
    	
/s/ Mark Ordan
    
	
 
    	
 
    
	
 
    	
WASHINGTON PRIME GROUP, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James M. Barkley
    
	
 
    	
 
    	
Name: James M. Barkley
    
	
 
    	
 
    	
Title: Vice President and Secretary
    

 

22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}]]