{"id":39022,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/employment-agreement-catellus-development-corp-and-m-kathleen.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employment-agreement-catellus-development-corp-and-m-kathleen","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/employment-agreement-catellus-development-corp-and-m-kathleen.html","title":{"rendered":"Employment Agreement &#8211; Catellus Development Corp. and M. Kathleen Smalley"},"content":{"rendered":"<pre>\nTO:       M. Kathleen Smalley\n\nFROM:     Nelson C. Rising\n\nDATE:     February 7, 2001\n \nSUBJECT:  Memorandum of Understanding regarding Employment\n\n--------------------------------------------------------------------------------\n\n     This Memorandum of Understanding (\"Memorandum\") sets forth the terms of\nyour employment with Catellus Development Corporation (the \"Company\") or its\nsubsidiary.  This Memorandum supersedes, in their entirety, all previous\nagreements and understandings concerning your employment except the Indemnity\nAgreement referenced in Section 8 below and any stock option agreements you have\nwith the Company; provided, however, that the provisions of this Memorandum\nregarding vesting of stock options in the event of termination of your\nemployment shall supersede such provisions of your stock option agreements.  In\naddition, nothing in this Memorandum shall affect the prior elimination of all\nprice vesting provisions previously in your stock option agreements.\n\n     Effective upon your execution of this Memorandum, the following provisions\nshall govern your employment with the Company or a subsidiary:\n\n1.   Title; Responsibilities and Duties. You are a full-time, regular employee\n     -----------------------------------                                      \nof the Company with the title of Senior Vice President-Corporate Operations and\nGeneral Counsel of the Company, and you shall be expected to handle such\nresponsibilities and perform such duties as I shall assign from time to time\nconsistent with those you were handling and performing as of September 30, 2000.\nIf you become an employee of a subsidiary of the Company, the Company will\nnevertheless be bound by the terms of this Memorandum.\n\n2.   At-Will Employment. You acknowledge and agree that your employment is at-\n     ------------------                                                      \nwill and that either the Company or you, at any time, with or without cause, may\nterminate the employment relationship, including all compensation and benefits.\nHowever, should your employment terminate, Section 10 below shall apply.\n\n3.   Salary. Effective January 1, 2000, you shall be paid at the annualized\n     ------                                                                \nsalary rate of at least $292,500. Your salary shall be payable in accordance\nwith the Company's normal payroll practices and subject to all applicable tax\nwithholding requirements. Your salary will be reviewed in the first quarter of\neach year starting in 2001 and, if appropriate, it will be increased retroactive\nto January 1 of that year. Your salary, as it may be increased from time to time\nin the sole discretion of the Company, shall be referred to as your \"Base\nSalary.\"\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 2 of 14\n\n4.    Bonuses.  You are eligible to receive an annual maximum cash bonus for\n      -------                                                               \neach calendar year of employment of up to two hundred percent (200%) of your\nBase Salary, subject to satisfaction of target performance criteria determined\neach year by the Company. The performance criteria may relate to individual\ngoals, Company or division goals, or a combination thereof and shall be\nestablished and communicated to you within the first 90 days after the start of\neach calendar year. Such bonuses shall be paid no later than March 31 of the\nfollowing year and are subject to all applicable tax withholding requirements.\nExcept as provided in Section 10, no bonus shall be payable if your employment\nterminates or you resign prior to the close of the calendar year to which such\nbonus relates.\n\n5.   Stock Options.  Beginning in 2003, you may be entitled to receive\n     -------------                                                    \nadditional stock options under the Company's 2000 Performance Award Plan based\non your and the Company's performance as determined by the Company in its sole\ndiscretion.\n\n6.   Benefits; Housing Arrangement.\n     ----------------------------- \n\n     6.1  Benefits. You shall be entitled to receive paid vacation, medical\n          --------                                                         \ncoverage, disability income replacement coverage, and other employee benefits,\nall to the same extent that the Company provides these benefits to the Company's\nother senior management employees.\n\n     6.2  Housing Arrangement.  You and the Company have entered into\n          -------------------                                        \narrangements for the purchase of a second residence for you in San Francisco,\nCalifornia, in accordance with the terms and conditions set forth in Appendix C\n                                                                     ----------\nhereto.\n\n7.   Expenses.  You shall be entitled to reimbursement for reasonable and\n     --------                                                            \nproperly documented expenses you incur in the conduct of the Company's business,\nincluding a monthly automobile allowance in accordance with the Company's\nAutomobile Allowance Policy as well as payment or reimbursement for cellular\nphone expenses.\n\n8.   Indemnity.  Pursuant to that certain Indemnity Agreement, by and between\n     ---------                                                               \nthe Company and you, dated as of January 1, 1999, the Company shall indemnify\nyou, and the Company shall maintain in full force and effect directors' and\nofficers' liability insurance for you in reasonable amounts from established and\nreputable insurers. To the same extent, the Company shall pay and advance all\nexpenses, including, without limitation, attorneys' fees, disbursements and\nretainers, accounting and witness fees, travel and deposition costs, expenses of\ninvestigations, judicial or administrative proceedings and appeals, amounts paid\nin settlement by you or on your behalf, actually incurred by you in connection\nwith any threatened, pending or completed claim, action, suit or proceeding,\nformal or informal, whether brought before or after January 1, 1999, whether\nbrought in the right of the Company or otherwise and whether of a civil,\ncriminal, administrative or investigative nature, by reason of the fact that you\nwere a director, officer, employee or agent of the Company or were serving at\nthe Company's request as a director, officer, employee, or agent of another\ncorporation, limited liability company, partnership, joint venture, trust, or\nother enterprise.\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 3 of 14\n\n9.   Employee Handbook; Confidential Information.  As a condition of employment,\n     -------------------------------------------                                \nyou acknowledge that you have reviewed the Company's current Employee Handbook,\nexecuted the Handbook's Receipt and Acknowledgment (which is the last page of\nthe Handbook), and returned such Receipt and Acknowledgment and a completed W4\nform to Jaime Gertmenian. You agree that during the term of your employment and\nthereafter for a period of three years, you shall abide by the confidentiality\nprovisions of the current Employee Handbook.\n\n10.  Termination of Employment. For definitions of capitalized terms used in\n     -------------------------                                              \nthis Section 10, see Appendix A attached to this Memorandum which is hereby\n                     ----------                                            \nincorporated by reference.\n\n     10.1 Right to Terminate.  The Company or you may terminate your employment\n          ------------------                                                   \nhereunder at any time by giving the other party prior written notice; provided,\nthat upon your death, your employment hereunder shall terminate automatically.\nImmediately upon the termination of your employment hereunder for any reason,\nyou shall return promptly to the Company any property (including documents) in\nyour possession which is owned by the Company.\n\n     10.2 Benefits upon Termination.\n          ------------------------- \n\n          (a) Basic Payments upon Termination.  If your employment terminates\n              -------------------------------                                \nfor any reason, the Company shall pay you your unpaid Base Salary for the period\nthrough the Date of Termination and your unpaid salary with respect to any\nvacation days accrued but not taken as of the Date of Termination (based upon\nyour Base Salary in effect at that time).  You shall also be entitled to other\npayments or benefits to the extent provided in the Company's employee benefit\nplans or arrangements.\n\n          (b) Termination Other than for Cause, or for Death, Disability or Good\n              ------------------------------------------------------------------\nReason.  If (i) you cease to be an employee of the Company on account of (A) the\n------                                                                          \nCompany's termination of your employment other than for Cause, (B) Disability or\n(C) your death, or (ii) you resign your employment with the Company after giving\nthe Company notice of the occurrence of one or more events that constitute Good\nReason within a reasonable period (but not more than 90 days after such\noccurrence) and the Company fails to correct such occurrence within a reasonable\ntime (but not more than 60 days) and your resignation occurs within 10 days\nafter the expiration of that cure period, then in addition to the amounts\npayable under Section 10.2(a),\n\n              (A) the stock options held by you shall become fully vested, and\n\n              (B) the Company shall pay you, in monthly payments over a period\nof 24 months from the Date of Termination, a monthly amount equal to one twenty-\nfourth (1\/24) of the amount that is two (2) times your Average Salary and Bonus.\n\n     You shall not be required to mitigate the amount of any payment provided\nfor in this Section 10.2(b) by seeking other employment or otherwise.  The\nCompany shall not be entitled to set off against the amounts payable to you\nunder this Memorandum any amounts owed to the Company by you, any amounts earned\nby you in other employment after termination of your \n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 4 of 14\n\nemployment with the Company, or any amounts which might have been earned by you\nin other employment had you sought such other employment.\n\n          (c) Termination for Cause; Resignation.  If you cease to be an\n              ----------------------------------                        \nemployee for any reason other than as set forth in Section 10.2(b), then the\nCompany shall have no obligation to make any payments to you for periods after\nthe Date of Termination, your unvested stock options shall terminate, and your\nvested options must be exercised, if at all, within the time periods after the\nDate of Termination specified in your stock option agreement(s).\n\n     10.3 Change of Control Payments. In the event that a Change of Control\n          --------------------------                                       \noccurs while you are employed by the Company pursuant to the terms of this\nMemorandum, and within 12 months after the occurrence of the Change of Control,\nyour employment by the Company or the Company's successor is terminated  by the\nCompany other than for Cause or you resign for one or more events that\nconstitute Good Reason, then you shall be entitled to receive from the Company\nor such successor, in lieu of, and not in addition to, the amounts otherwise\npayable to you pursuant to Section 10.2(b) hereof, the benefits provided below:\n\n          (a) the Company shall pay to you (A) your Base Salary, when due,\nthrough the Date of Termination at the rate in effect at the time the applicable\nNotice of Termination is given, (B) the unpaid portion, if any, of any annual\nbonus which has been earned by you but which has not been paid as of  the Date\nof Termination, and (C) all other amounts to which you are entitled under any\ncompensation plan of the Company at the time such payments are due, and (D) any\nunpaid salary with respect to any vacation days accrued but not taken as of the\nDate of Termination (based upon your rate of Base Salary in effect at the time\nthe applicable Notice of Termination is given); and\n\n          (b) all stock options or other equity awards held by you with respect\nto the Company's Common Stock shall become fully vested; and\n \n          (c) in lieu of any further salary payments to you for periods\nsubsequent to the Date of Termination, the Company shall pay to you a lump sum\npayment in an amount which is equal to three (3) times your Average Salary and\nBonus; and\n\n          (d) you shall receive the benefits of the Tax Protection Policy\nattached hereto as Appendix B, which is hereby incorporated by reference.\n                   ----------                                            \n\n11.  Severability.   In case any one or more provisions of this Memorandum\n     ------------                                                         \nshall be invalid, illegal or unenforceable in any respect, the validity,\nlegality and enforceability of the remaining provisions shall not be in any way\nbe affected or impaired.\n\n12.  Arbitration.  To the fullest extent allowed by law, any controversy or\n     -----------                                                           \nclaim arising out of or relating to your employment with the Company (or\ntermination of your employment) shall be settled by binding and non-appealable\narbitration by an arbitrator in the City of Dallas.  Possible disputes covered\nby the foregoing, include (but are not limited to) wage, contract,\ndiscrimination, or other employment-related claims under laws known as Title VII\nof the Civil Rights Act, \n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 5 of 14\n\nCalifornia Fair Employment and Housing Act and comparable statutes in other\nstates if applicable, Americans with Disabilities Act, Age Discrimination in\nEmployment Act, and any other statutes relating to an employee's relationship\nwith his\/her employer. However, claims for workers' compensation benefits and\nunemployment insurance are not covered by this arbitration agreement and such\nclaims may be presented by you to the appropriate court or state agency. You and\nthe Company shall initially confer and attempt to reach agreement on the\nindividual to be appointed as such arbitrator. If no agreement is reached, the\nparties shall request from the Judicial Arbitration and Mediation Services\n(\"JAMS\") office in the city or region where your office is located, a list of\nfive retired judges affiliated with JAMS. (If there is no JAMS office in the\ncity or region where your office is located, then an organization which is\ncomparable to JAMS would be utilized.) You and the Company shall each\nalternately strike names from such list until only one name remains and such\nperson shall thereby be selected as the arbitrator. Except as otherwise provided\nfor herein, such arbitration shall be conducted in conformity with the\nprocedures specified in the California Arbitration Act (Cal. C.C.P. (S)(S) 1280\net seq.) (or the statute applicable in the state in which your office is \n-- ---                                                        \nlocated). The arbitrator shall allow the discovery authorized by California Code\nof Civil Procedure (S)1283.05 or any other discovery required by law in\narbitration proceedings. Also, to the extent that anything in this Memorandum\nconflicts with any arbitration procedures required by applicable law, the\narbitration procedures required by applicable law shall govern. The arbitrator\nshall issue a written award that sets forth the essential findings and\nconclusions on which the award is based. The arbitrator shall have the authority\nto award any relief authorized by law in connection with the asserted claims or\ndisputes. The arbitrator's award shall be subject to correction, confirmation,\nor vacation, as provided by any applicable law setting forth the standard of\njudicial review of arbitration awards. The parties shall bear equally the\narbitrator's fee and any other type of expense or cost that the employee would\nnot be required to bear if he or she were free to bring the dispute or claim in\ncourt as well as any other expense or cost that is unique to arbitration but\nexclusive of each party's attorneys' fees. The parties intend that this Section\n12 shall be valid, binding, enforceable and irrevocable and shall survive the\ntermination of this Memorandum. Any final decision of the arbitrator so chosen\nmay be enforced by a court of competent jurisdiction. You are waiving your right\nto a jury trial and agree that the decision of the arbitrator shall be final and\nbinding. If either party is determined by the arbitrator to be the prevailing\nparty in the arbitration, then that party will be entitled to reimbursement from\nthe other party of all the reasonable fees (including attorney fees) and\nexpenses incurred in connection with such arbitration.\n\n13.  Attorneys' Fees.  The Company will pay your attorneys' fees in connection\n     ---------------                                                          \nwith the preparation and negotiation of this Memorandum.\n\n14.  Amendments.  No amendments to this Memorandum may be made except by writing\n     ----------                                                                 \nsigned by you and the Company.\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 6 of 14\n\n15.  Governing Law.  This Memorandum shall be governed by the internal laws of\n     -------------                                                            \nthe State of California.\n\n\nCATELLUS DEVELOPMENT CORPORATION\n\n\n\nBy \/s\/ Nelson C. Rising             \n  -------------------------------\n     Nelson C. Rising\n     Chairman of the Board and\n     Chief Executive Officer\n\n\n                                        ACCEPTED AND AGREED:\n\n \n                                        \/s\/ M. Kathleen Smalley             \n                                        -----------------------------\n                                        M. Kathleen Smalley\n\n                                        Date signed:  February __, 2001\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 6 of 14\n\n                                  Appendix A\n                                  ----------\n\n                                  Definitions\n                                  -----------\n\n     For purposes of this Memorandum, the following definitions are set forth\nbelow:\n\n          (i)  \"Average Salary and Bonus\" means the greater of (a) your annual\nBase Salary and annual bonus, including any amounts deferred by you under the\nCompany's Profit Sharing and Savings Plan, Cafeteria Plan, and Executive\nDeferred Compensation Plan and any other deferred compensation program now or\nhereafter established by the Company, earned by you for the three full calendar\nyears prior to termination of your employment (regardless of whether all of such\nyears occurred while this Memorandum was in effect and regardless of whether\nthose earned amounts were paid out on a current basis or deferred) or such\nsmaller number of full calendar years as you have been employed by the Company,\ndivided by the number of such full calendar years, or (b) your annual Base\nSalary and annual bonus, including any amounts deferred by you under the\nCompany's Profit Sharing and Savings Plan, Cafeteria Plan, and Executive\nDeferred Compensation Plan and any other deferred compensation program now or\nhereafter established by the Company, earned by you for the three full calendar\nyears with respect to which annual bonuses have been determined prior to the\noccurrence of the Change of Control (regardless of whether all of such years\noccurred while this Memorandum was in effect and regardless of whether those\nearned amounts were paid out on a current basis or deferred) or such smaller\nnumber of full calendar years as you have been employed by the Company, divided\nby the number of such full calendar years.\n\n          (ii)  \"Cause\" means that the Company provides you with a Notice of\nTermination for either of the following reasons: (a) the willful and continued\nfailure by you substantially to perform your material duties (other than any\nsuch failure resulting from your incapacity due to physical or mental illness)\nafter written demand for substantial performance of such duties is delivered to\nyou by the Board of Directors, which demand identifies the manner in which the\nBoard of Directors believes that you have not substantially performed your\nduties and you have been given a reasonable period of time (but in no event more\nthan 60 days) to correct your deficient performance; or (b) your engaging in\negregious misconduct involving serious moral turpitude to such an extent that,\nin the reasonable judgment of the Board of Directors, such misconduct\nsubstantially impairs your ability to perform your duties with the Company. For\npurposes of clause (a) of this definition, no act, or failure to act, on your\npart shall be deemed \"willful\" unless done, or omitted to be done, by you\nwithout reasonable belief that your action or omission was in the best interest\nof the Company.\n\n          (iii) A \"Change of Control\" shall be deemed to have occurred upon the\nhappening of any of the following events:\n\n                 (a) the acquisition or holding of the Company, by any\nindividual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)\nof the Securities Exchange Act of 1934, as amended (the \"Exchange Act\")) (an\n\"Acquiror\") of beneficial ownership (within the meaning of Rule 13d-3\npromulgated under the Exchange Act) of 25% or more of the combined\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 8 of 14\n\nvoting power of the then outstanding shares of Common Stock and other stock of\nthe Company entitled to vote generally in the election of directors (the\n\"Outstanding Company Voting Securities\"), but excluding for this purpose any\nsuch acquisition (or holding) by (i) the Company or any corporation controlled\nby the Company; (ii) any employee benefit plan (or related trust) of the Company\nor any corporation controlled by the Company; (iii) any acquisition or ownership\nby an Acquiror of 25% of the Outstanding Company Voting Securities as a result\nof an acquisition of common stock or voting securities by the Company which, by\nreducing the number of shares of the Company's common stock or voting securities\noutstanding, increases the proportionate number of shares beneficially owned by\nsuch Acquiror to 25% or more of the Outstanding Company Voting Securities;\nprovided, however, that if an Acquiror shall become the beneficial owner of 25%\nor more of the Outstanding Company Voting Securities by reason of a share\nacquisition by the Company as described above and shall, after such share\nacquisition by the Company, become the beneficial owner of any additional shares\nof common stock or voting securities of the Company, then such acquisition shall\nconstitute a Change of Control; or (iv) any corporation with respect to which,\nfollowing such acquisition, more than 50% of, respectively, the then outstanding\nshares of Common Stock of such corporation and the combined voting power of the\nthen outstanding voting securities of such corporation entitled to vote\ngenerally in the election of directors is then beneficially owned, directly or\nindirectly, by all or substantially all of the individuals and entities who were\nthe beneficial owners, respectively, of the Outstanding Company Voting\nSecurities immediately prior to such acquisition in substantially the same\nproportion as their ownership, immediately prior to such acquisition, of the\nthen Outstanding Company Voting Securities;\n\n          (b) individuals who, as of the date hereof, constitute the Board of\nDirectors (the \"Continuing Directors\") cease for any reason to constitute at\nleast a majority of the Board, provided that any individual becoming a director\nsubsequent to the date hereof whose election, or nomination for election by the\nstockholders of Company, was approved by a vote of at least a majority of the\npersons then comprising the Continuing Directors shall be considered a\nContinuing Director, but excluding, for this purpose, any such individual whose\ninitial election as a member of the Board is in connection with an actual or\nthreatened \"election contest\" relating to the election of the directors of the\nCompany (as such term is used in Rule 14a-11 of Regulation 14A promulgated under\nthe Exchange Act); or\n\n          (c) consummation by the Company of (1) a reorganization, merger or\nconsolidation of the Company, with respect to which in each case all or\nsubstantially all of the individuals and entities who were the respective\nbeneficial owners of the Outstanding Company Voting Securities immediately prior\nto such reorganization, merger or consolidation do not, following such\nreorganization, merger or consolidation, beneficially own, directly and\nindirectly, more than 50% of, respectively, the then outstanding shares of\nCommon Stock and the combined voting power of the then outstanding voting\nsecurities entitled to vote generally in the election of directors of the\ncorporation or other entity resulting from such reorganization, merger or\nconsolidation, or (2) a complete liquidation or dissolution of the Company, or\n(3) the sale or other disposition of all or substantially all of the assets of\nthe Company.\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 9 of 14\n\n          (iv) \"Date of Termination\" means the effective date specified in the\nNotice of Termination as of which your employment terminates  or, in the event\nof termination of employment other than for Cause, the date as of which your\nemployment is to terminate pursuant to the provisions of Section 10.1 of this\nMemorandum.\n\n          (v) \"Disability\" means that (i) you have a physical or mental\ncondition that renders you incapable, after reasonable accommodation, of\nperforming your duties; (ii) such condition is reasonably determined by the\nChief Executive Officer to be of a long-term nature; and (iii) you are eligible\nfor income replacement benefits under the Company's long-term disability plan\nduring such period of disability.\n\n          (vi) \"Notice of Termination\" means a notice of a proposed termination\nby the Company with a written explanation to you of the grounds for such\nproposed termination.\n\n          (vii)  \"Good Reason\" exists if, without your express written consent,\nany of the following occurs:\n\n                 (A) the Company reduces your Base Salary as in effect from time\nto time; or\n\n                 (B) an assigning of duties to you that are a reduction in any\nsubstantial respect from your position, authority, or responsibilities as of\nSeptember 30, 2000; or\n\n                 (C) the Company's failure to fulfill the Company's obligations\nunder this Memorandum; or\n\n                 (D) the Company's intentional failure, without your consent, to\npay to you any portion of your Base Salary, earned bonus, or other current\ncompensation (if any), or to pay to you any portion of any installment of\ndeferred compensation under any deferred compensation program within ten\nbusiness days of the date such compensation is due or to issue shares of the\nCompany's Common Stock in accordance with the terms of stock options granted to\nyou upon valid exercise thereof; or\n\n                 (E) (i) any requirement that you relocate your principal\nresidence or establish a new secondary residence in a new location because of a\nCompany requirement that you be based in that new location, or (ii) any\nrequirement that you spend substantially more time traveling on Company business\nthan you did in the year ending September 30, 2000, because of a Company\nrequirement that you have a new place of business; or\n\n                 (F) the Company does not allow you to devote reasonable time to\nactivities other than those required under this Memorandum, including\nsupervision of personal investments and activities involving professional,\ncharitable, educational, political, religious and similar types of\norganizations, speaking engagements, memberships of boards of directors of other\norganizations and similar activities, provided that you shall not serve on the\nboard of directors of any other business or hold any other position with any\nbusiness without the consent of the Chief Executive Officer; or\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 10 of 14\n\n                 (G) the Company does not allow you to serve from time to time\nat your discretion as a Lecturer at Harvard Law School or an officer or director\nof Yorkshire Restaurants or Yorkshire Securities; or\n \n                 (H) the failure of any successor entity in a Change of Control\nto continue this Memorandum in effect and assume the Company's obligations and\nresponsibilities hereunder.\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 11 of 14\n\n                                  Appendix B\n                                  ----------\n\n                             Tax Protection Policy\n                             ---------------------\n\n          This Appendix shall apply if it is determined that any payment,\ndistribution or benefit provided (including, without limitation, the\nacceleration of any payment, distribution or benefit, the provision of any\nseverance pay or benefits and the acceleration of exercisability of any stock\noption) to you or for your benefit (whether paid or payable or distributed or\ndistributable) pursuant to the terms of this Memorandum or otherwise pursuant to\nor by reason of any other agreement, policy, plan, program or arrangement,\nincluding without limitation any stock option, stock appreciation right or\nsimilar right, or the lapse or termination of any restriction on or the vesting\nor exercisability of any of the foregoing (the \"Payments\") would be subject to\nthe excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as\namended (the \"Code\"),  by reason of being \"contingent on a change in the\nownership or control\" of the Company, within the meaning of Section 280G of the\nCode or to any similar tax imposed by state or local law, or any interest or\npenalties with respect to such excise tax (such tax or taxes, together with any\nsuch interest or penalties, are collectively referred to as the \"Excise Tax\").\nIf the Payments are subject to the Excise Tax and it is determined that the\nParachute Value of the Payments  (as defined below) exceeds 110% of the Safe\nHarbor Amount (as defined below), you shall be entitled to receive from the\nCompany an additional payment (the \"Gross-Up Payment\") in an amount such that\nthe net amount of the Payments and the Gross-Up Payment retained by you after\nthe calculation and deduction of all Excise Taxes (including any interest or\npenalties imposed with respect to such taxes) on those Payments and all federal,\nstate and local income tax, employment tax and Excise Tax (including any\ninterest or penalties imposed with respect to such taxes) on the Gross-Up\nPayment provided for in this Appendix B, and taking into account any lost or\n                             ----------                                     \nreduced tax deductions you may incur on account of the Gross-Up Payment, shall\nbe equal to the Payments.  If it shall be determined that the Parachute Value of\nthe Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up\nPayment shall be made to you, and the amount of the Payments otherwise due you\nshall be reduced to the extent necessary to assure that the Parachute Value of\nthe Payments as calculated for the Payments remaining after such reduction does\nnot exceed the greater of (i) the Safe Harbor Amount or (ii) the amount which\nyields you the greatest after-tax amount of Payments after taking into account\nany Excise Tax you must pay with respect to those Payments.  To the extent any\nsuch reduction to your Payments becomes necessary by reason of the preceding\nsentence, the reduction shall be applied against the portion of your Payments\nbased upon your Average Salary and Bonus. For the purposes of this Appendix B,\n                                                                   ---------- \n(a) \"Parachute Value of the Payments\" shall mean the present value as of the\ndate of the Change of Control for purposes of Section 280G of the Code of the\nportion of such Payments that constitutes a \"parachute payment\" under Section\n280G(b)(2), as determined by the Accountants (as defined below) for purposes of\ndetermining whether and to what extent the Excise Tax will apply to such\nPayments, and (b) \"Safe Harbor Amount\" shall mean the maximum Parachute Value of\nthe Payments that you can receive without any Payments being subject to the\nExcise Tax.\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 12 of 14\n \n              (i) All determinations required to be made under this Appendix B,\n                                                                    ---------- \nincluding whether and when the Gross-Up Payment is required and the amount of\nsuch Gross-Up Payment, and the assumptions to be utilized in arriving at such\ndeterminations shall be made by the Accountants (as defined below) which shall\nprovide you and the Company with detailed supporting calculations with respect\nto such Gross-Up Payment within fifteen (15) business days of the receipt of\nnotice from you or the Company that you have received or shall receive a\nPayment.  For purposes of making the determinations and calculations required\nherein, the Accountants may make reasonable assumptions and approximations\nconcerning applicable taxes and may rely on reasonable, good faith\ninterpretations concerning the application of Section 280G and 4999 of the Code,\nincluding (without limitation) the Proposed Treasury Regulations under Section\n280G of the Code, provided that the Accountants' determinations must be made on\nthe basis of  \"substantial authority\" (within the meaning of Section 6662 of the\nCode).  For the purposes of this Appendix B, the \"Accountants\" shall mean the\n                                 ----------                                  \nCompany's independent certified public accountants serving immediately prior to\nthe Change of Control.  In the event that the Accountants are also serving as\naccountant or auditor for the individual, entity or group effecting the Change\nof Control, you may appoint another nationally recognized public accounting firm\nto make the determinations required hereunder (which accounting firm shall then\nbe referred to as the Accountants hereunder).  All fees and expenses of the\nAccountants shall be borne solely by the Company.\n \n              (ii)  For the purposes of determining whether any of the Payments\nshall be subject to the Excise Tax and the amount of such Excise Tax, such\nPayments shall be treated as \"parachute payments\" within the meaning of Section\n280G of the Code, and all \"parachute payments\" in excess of the \"base amount\"\n(as defined under Section 280G(b)(3) of the Code) shall be treated as subject to\nthe Excise Tax, unless and except to the extent that in the opinion of the\nAccountants such Payments (in whole or in part) either do not constitute\n\"parachute payments\" or represent reasonable compensation for services actually\nrendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the\n\"base amount,\" or such \"parachute payments\" are otherwise not subject to such\nExcise Tax.  For purposes of determining the amount of the Gross-Up Payment, you\nshall be deemed to pay federal income taxes at the highest applicable marginal\nrate of federal income taxation for the calendar year in which the Gross-Up\nPayment is to be made and to pay any applicable state and local income taxes at\nthe highest applicable marginal rate of taxation for the calendar year in which\nthe Gross-Up Payment is to be made, net of the actual reduction in federal\nincome taxes which is reasonably expected to result from the deduction of such\nstate and local taxes if paid in such year (determined, however, with regard to\nlimitations on deductions based upon the amount of your adjusted gross income).\nTo the extent practicable, any Gross-Up Payment with respect to any Payment\nshall be paid by the Company at the time you are entitled to receive the Payment\nand in no event shall any Gross-Up Payment be paid later than five days after\nyour receipt of the Accountant's determination.  Any determination by the\nAccountants shall be binding upon the Company and you.\n\n              (iii)  As a result of uncertainty in the application of Section\n4999 of the Code at the time of the initial determination by the Accountants\nhereunder, it is possible that the Gross-Up Payment made shall have been an\namount less than the Company should have paid \n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 13 of 14\n\npursuant to this Appendix B (the\"Underpayment\"). Unless the Company elects to \n                 ----------\nexhaust its remedies under clause (v) below with respect to the additional \nExcise Tax on your Payments, the Underpayment shall be promptly paid by the \nCompany to or for your benefit at the time you are required to pay \nthe additional Excise Tax resulting in such Underpayment.\n \n              (iv) You and the Company shall each provide the Accountants \naccess to and copies of any books, records and documents in the Company's or \nyour possession, as the case may be, reasonably requested by the Accountants, \nand otherwise cooperate with the Accountants in connection with the preparation \nand issuance of the determination contemplated by this Appendix B.\n                                                       ---------- \n \n              (v)  You shall notify the Company in writing of any claim by the\nInternal Revenue Service that, if successful, would require the payment by the\nCompany of the Gross-Up Payment.  Such notification shall be given as soon as\npracticable after you are informed in writing of such claim and shall apprise\nthe Company of the nature of such claim and the date on which such claim is\nrequested to be paid. You shall not pay such claim prior to the expiration of\nthe 30-day period following the date on which you give such notice to the\nCompany (or such shorter period ending on the date that any payment of taxes,\ninterest and\/or penalties with respect to such claim is due). If the Company\nwere to notify you in writing prior to the expiration of such period that it\ndesires to contest such claim, you shall:\n \n                   (A) give the Company any information reasonably requested by\nthe Company relating to such claim;\n \n                   (B) take such action in connection with contesting such claim\nas the Company shall reasonably request in writing from time to time, including,\nwithout limitation, accepting legal representation with respect to such claim by\nan attorney reasonably selected by the Company and reasonably satisfactory to\nyou;\n \n                   (C) cooperate with the Company in good faith in order to\neffectively contest such claim; and\n \n                   (D) permit the Company to participate in any proceedings\nrelating to such claim; provided, however, that the Company shall bear and pay\ndirectly all additional Excise Taxes imposed upon you and all costs, legal fees\nand other expenses (including additional interest and penalties) incurred in\nconnection with such contest and shall indemnify you for and hold you harmless\nfrom, on an after-tax basis, any additional Excise Tax (including interest and\npenalties with respect thereto) imposed upon you and any Excise Tax or income or\nemployment tax (including interest and penalties with respect thereto)\nattributable to the Company's payment of that additional Excise Tax on your\nbehalf or imposed as a result of such representation and payment of all related\ncosts, legal fees and expenses. The amounts owed to you by reason of the\nforegoing shall be paid to you or for your benefit as they become due and\npayable. Without limiting the foregoing provisions of this paragraph, the\nCompany shall control all proceedings taken in connection with such contest and,\nat its sole option, may pursue or forgo any and all administrative appeals,\nproceedings, hearings and conferences with the\n\n \nM. Kathleen Smalley\nMemorandum of Understanding regarding Employment\nFebruary 7, 2001\nPage 14 of 14\n\ntaxing authority in respect of such claim and may, at the Company's sole option,\neither direct you to pay the tax claimed and sue for a refund or contest the\nclaim in any permissible manner, and you agree to prosecute such contest to a\ndetermination before any administrative tribunal, in a court of initial\njurisdiction and in one or more appellate courts, the Company shall determine;\nprovided, however, that if the Company were to direct you to pay such claim and\nsue for a refund, the Company shall advance the amount of such payment to you,\non an interest-free basis, and shall indemnify you for and hold you harmless\nfrom, on an after-tax basis, any Excise Tax or income tax (including interest or\npenalties with respect thereto) imposed with respect to such advance or with\nrespect to any imputed income with respect to such advance (including as a\nresult of any forgiveness by the Company of such advance); provided, further,\nthat any extension of the statute of limitations relating to the payment of\ntaxes for your taxable year with respect to which such contested amount is\nclaimed to be due is attributable in whole or in part to such contested amount.\nFurthermore, the Company's control of the contest shall be limited to issues\nwith respect to which a Gross-Up Payment would be payable hereunder and you\nshall be entitled to settle or contest, as the case may be, any other issue\nraised by the Internal Revenue Service or any other taxing authority.\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7030],"corporate_contracts_industries":[9488],"corporate_contracts_types":[9539,9544],"class_list":["post-39022","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-catellus-development-corp","corporate_contracts_industries-real__operators","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/39022","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=39022"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=39022"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=39022"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=39022"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}