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URBAN SHOPPING CENTERS
EXECUTIVE SEVERANCE PLAN
Mayer, Brown & Platt
Chicago, Illinois
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TABLE OF CONTENTS
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SECTION I
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General........................................................4
I.A Background...................................4
I.B Purpose and Effective Date...................4
I.C Plan Administration..........................4
I.D Source of Payments...........................4
I.E Notices......................................5
I.F Action by Affiliated Company.................5
I.G Gender and Number............................5
I.H Governing Laws...............................5
I.I Plan Year....................................5
I.J Plan Not Guarantee of Employment.............5
SECTION II
Participation..................................................5
II.A. Participation................................5
II.B. Duration of Participation....................6
SECTION III
Severance Benefits.............................................6
III.A. Entitlement to Severance Benefits............6
III.B. Change in Control............................6
III.C. Change in Circumstance.......................8
III.D. Amount of Severance Benefit..................9
III.E. Maximum Severance Benefit....................9
III.F. Payment of Severance Benefit.................9
III.G. Reemployment.................................9
III.H. Other Benefits...............................9
III.I. Nonalienation................................9
III.J. Withholding..................................10
III.K. Benefits on Death............................10
III.L. Release Agreement............................10
SECTION IV
Committee......................................................10
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IV.A. Duties and Authority of Committee............10
IV.B. Committee Decision Final.....................11
IV.C. Exercise of Committee Duties.................11
IV.D. Indemnification of the Committee.............11
IV.E. Interested Committee Member..................11
SECTION V
Amendment or Termination........................................11
V.A. Amendment or Termination......................11
V.B. Successors....................................11
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URBAN SHOPPING CENTERS
EXECUTIVE SEVERANCE PLAN
SECTION I
GENERAL
I.A. BACKGROUND. Urban Shopping Centers, Inc., a Maryland corporation (the
"Company"), is the general partner of Urban Shopping Centers, L.P. (the
"Partnership"), an Illinois limited partnership. The Partnership owns all of the
preferred stock of Urban Retail Properties Co. (the "Management Company"), a
Delaware corporation. The Company, the Partnership, and the Management Company
are each referred to individually as an "Affiliated Company," and collectively
as the "Affiliated Companies."
I.B. PURPOSE AND EFFECTIVE DATE. The Company has established the Urban
Shopping Centers Executive Severance Plan (the "Plan") effective January 1, 1999
(the "Effective Date") so that it and each of the Affiliated Companies which,
with the consent of the Company, adopts the Plan, may provide severance pay and
benefits to eligible employees as readjustment assistance while seeking another
position due to certain covered terminations of employment. The Affiliated
Companies (including the Company), the employees of which participate in the
Plan, are referred to below, collectively, as the "Employers" and individually
as an "Employer.
I.C. PLAN ADMINISTRATION. The authority to control and manage the operation
and administration of the Plan shall be vested in the Executive Compensation
Committee of the Board of Directors of the Company (the "Committee"). The
members of the Committee shall be "named fiduciaries" as described in section
402 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), with respect to their authority under the Plan. Except as otherwise
specifically provided in Section 4, the Company shall be the administrator of
the Plan and shall have the rights, duties, and obligations of an
"administrator" as that term is defined in Section 3(16)(A) of ERISA.
I.D. SOURCE OF PAYMENTS. The obligations of the Company and the other
Employers under the Plan are purely contractual. Any amount payable under the
terms of the Plan shall be paid from the general assets of the Company or the
Employer, as applicable, and no trust or other separate fund shall be
established for this purpose.
I.E. NOTICES. Any notice or document required to be filed under the Plan
shall be considered to be properly filed if delivered or mailed by registered
mail, postage prepaid, to the Committee, in care of the Company, to the
attention of the Corporate Secretary, at 900 North
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Michigan Avenue, Chicago, Illinois 60611. Any notice required under the Plan may
be waived by the person entitled thereto.
I.F. ACTION BY AFFILIATED COMPANY. Any action required or permitted to be
taken by an Affiliated Company which is a corporation shall be by resolution of
its board of directors or by a duly authorized officer of such company. Any
action required or permitted to be taken under the Plan by an Affiliated Company
which is a partnership shall be made by writing adopted or executed by its
general partner or by a person or persons authorized in writing by its general
partner. Any action required or permitted to be taken under the Plan by an
Affiliated Company which is a limited liability company shall be made by writing
adopted or executed by its board of directors or managing member or by a person
or persons authorized by its board of directors or managing member, as called
for by such limited liability company's governing agreement.
I.G. GENDER AND NUMBER. Where the context admits, words in any gender shall
include the other gender, words in the singular shall include the plural, and
the plural shall include the singular.
I.H. GOVERNING LAWS. The Plan shall be construed and administered in
accordance with the internal laws of the State of Illinois, to the extent that
such laws are not preempted by the laws of the United States of America.
I.I. PLAN YEAR. The Plan Year shall be calendar year.
I.J. PLAN NOT GUARANTEE OF EMPLOYMENT. The Plan does not constitute a
guarantee of employment by the Company or any other Affiliated Company, and
participation in the Plan will not give any individual the right to be retained
in the employ of the Company or any other Affiliated Company, nor any right or
claim to any benefit under the Plan, unless such right or claim has specifically
arisen under the Plan. The Company and the other Affiliated Companies reserve
all of their respective rights to terminate the employment relationship of any
employee, with or without cause, at any time, for any reason. The Company and
the other Affiliated Companies reserve all of their respective rights to amend
or modify any of the terms and conditions of the employment of any individual.
SECTION II
PARTICIPATION
II.A. PARTICIPATION. Each employee of the Company or an Employer shall
become a "Participant" in the Plan upon the later of the Effective Date or the
date on which he meets all of the following requirements:
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(1) he is an "Eligible Executive," as defined below; and
(2) he is not a participant in the Urban Shopping Centers Employee
Severance Plan or the Urban Shopping Centers Senior Executive
Parachute Plan.
An employee of an Employer is an "Eligible Executive" if he is designated as
such by the Committee or by the Company's Chief Executive Officer, either by
individual designation, or by being a member of a group so designated.
Notwithstanding the foregoing, as of the Effective Date, the employees of the
Company and the employees of the Employers who are listed on Supplement A, which
supplement forms part of the Plan, are Eligible Executives.
II.B. DURATION OF PARTICIPATION. An individual shall cease to be a
Participant in, or to have any rights under, the Plan on the date on which he
ceases to meet all of the requirements of subsection 2.1, unless he is then
eligible to receive benefits under the provisions of Section 3, and, subject to
the terms and conditions of the Plan, he shall again become a Participant in
accordance with subsection 2.1 if he again satisfies the requirements of
subsection 2.1. A Participant who is entitled to payment of a benefit under the
provisions of Section 3 shall remain a Participant in the Plan until the full
amount of his benefit has been paid.
SECTION III
SEVERANCE BENEFITS
III.A. ENTITLEMENT TO SEVERANCE BENEFITS. Subject to the terms and
conditions of the Plan, a Participant will be entitled to a "Severance Benefit"
in an amount determined in accordance with the provisions of subsection 3.4 in
the event of both a Change in Control and Change in Circumstances with respect
to such Participant, as such terms are defined below.
III.B. CHANGE IN CONTROL. The term "Change in Control" means the first to
occur of the following events:
(1) any person or group of commonly controlled persons other than JMB
Realty Corporation or any of its affiliated or associated entities
owns or controls, directly or indirectly, fifty percent (50%) or more
of the voting control or value of the capital stock of the Company; or
(2) any person or group of commonly controlled persons other than JMB
Realty Corporation or any of its affiliated or associated entities
owns or controls, directly or indirectly, twenty percent (20%) or more
of the voting control or value of the capital stock of the Company and
such ownership or control percentage is greater
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than the then ownership or control percentage of JMB Realty
Corporation and all of its affiliated or associated entities; or
(3) the shareholders of the Company approve an agreement to merge or
consolidate with another corporation or other entity (other than JMB
Realty Corporation or any of its affiliated or associated entities)
resulting (whether separately or in connection with a series of
transactions) in a change in ownership of twenty percent (20%) or more
of the voting control or value of the capital stock of the Company, or
an agreement to sell or otherwise dispose of all or substantially all
of the Company's assets (including, without limitation, a plan of
liquidation or dissolution), or otherwise approve of a fundamental
alteration in the nature of the Company's business.
Notwithstanding the foregoing provisions of this subsection 3.2, the ownership
of capital stock by the Chief Executive Officer of the Company, by other senior
management employees of the Company or an Employer who are Participants, by JMB
Realty Corporation or by any of its affiliated or associated entities and/or
their respective affiliates shall not be deemed to result in a "Change in
Control" of the Company.
III.C. CHANGE IN CIRCUMSTANCE. "Change in Circumstances" means the
occurrence of any of the following within twenty-four months of a Change in
Control while the Participant is employed by an Employer:
(i) the Participant's voluntary termination of employment within 120 days
following a demotion or reduction in the Participant's job
responsibility from that in effect immediately prior to the Change in
Control;
(ii) the Participant's voluntary termination of employment within 120 days
following a reduction in the Participant's Base Salary in an amount
which equals or exceeds three (3) percent of such Base Salary, as
described in Paragraph 3.4, as in effect immediately prior to the
Change in Control;
(iii) the Participant's voluntary termination of employment within 120 days
following the Participant's relocation to a location not within fifty
miles of his office or job location on the date of the Change in
Control, except for required travel on the Company's business to an
extent substantially consistent with his business travel obligations
as in effect immediately prior to the Change in Control; or
(iv) the Participant's involuntary termination of employment by the Company
without Cause.
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For purposes of the Plan, the term "Cause" means a Participant's violation of a
policy, rule or procedure of his employer, misconduct, unsatisfactory
performance of his duties, or similar circumstances, each as determined by the
Committee or its delegate, in its sole discretion.
III.D. AMOUNT OF SEVERANCE BENEFIT. Subject to the terms and conditions of
the Plan, if a Participant becomes entitled to a Severance Benefit in accordance
with the foregoing provisions of this Section 3, then the amount of his
Severance Benefit shall be the sum of:
(a) the Participant's Annual Base Salary multiplied by 1.5; and
(b) the Participant's Average Annual Bonus multiplied by 1.5.
For purposes of the Plan, "Annual Base Salary" for a Participant means the
amount of the Participant's annual base salary from an Employer at the rate in
effect immediately prior to the Participant's Severance Date, excluding bonuses,
overtime and premium pay, shift differentials, incentive compensation and all
other compensation; provided, however, that if the Participant's annual base
salary at the rate in effect immediately prior to the date of the Change in
Control is greater than the Participant's annual base salary at the rate in
effect immediately prior to his Severance Date, then with respect to such
Participant, "Base Salary" means the amount of the Participant's annual base
salary at the rate in effect immediately prior to the date of the Change in
Control which precedes his Severance Date, excluding bonuses, overtime and
premium pay, shift differentials, incentive compensation and all other
compensation. A Participant's "Severance Date is the date on which the Change in
Circumstance occurs with respect to the Participant, which date is coincident
with or follows the date of a Change in Control.
The Participant's "Average Annual Bonus" shall be equal to the Participant's
average annual cash bonus paid or payable by an Employer under the Company's
Bonus Incentive Compensation Plan, or any successor to such plan, or otherwise,
for the most recent three calendar years ending on the date coincident with or
prior to the Participant's Severance Date; provided, however, that for purposes
of the Plan, the cash bonus for a year shall include the cash bonus that is
attributable to that year as determined by the Company or the Employer in its
award of bonuses for a year, regardless of when the cash bonus is actually paid
to the Participant or includible in the Participant's gross income; and provided
further that a cash bonus shall not include cash payments, if any, from the
Urban Shopping Centers 1996 Unit Incentive Plan, or any similar equity-based
incentive plan. If for any year a Participant has been employed by an Employer
for less than a full year, the cash bonus attributable to that partial year
shall be taken into account for that year, unless the Employer has not yet
determined the bonus attributable to that year, in which case the cash bonus
taken into account for the partial year shall be deemed to be the cash bonus, if
any, awarded to the Participant which is attributable to the year immediately
prior to the partial year. If a Participant has been employed less than three
years, such Average Annual Bonus from the Company or the Employer shall be based
on the number of full and partial years that the Participant has been employed
by the Company or the Employer.
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III.E. MAXIMUM SEVERANCE BENEFIT. Notwithstanding any other provision of
the Plan, in no event shall the Severance Benefit to which any Participant is
entitled exceed an amount equal to twice the Participant's annual compensation
for the calendar year ending immediately prior to the Participant's Severance
Date. For purposes of this subsection 3.5, a Participant's annual compensation
shall be determined in accordance with Department of Labor regulation
2510.3-2(b)(2)(i).
III.F. PAYMENT OF SEVERANCE BENEFIT. A Participant's Severance Benefit
described in this Section 3 shall be payable in one lump sum as soon as
practicable following the Participant's Severance Date, but in any event, no
more than 45 days following the Participant's Severance Date. Notwithstanding
the foregoing, in no event shall the period over which the Severance Benefit
under the Plan shall be paid exceed 24 months.
III.G. REEMPLOYMENT. If a Participant is receiving a Severance Benefit and
the Participant is rehired by an Employer, then payment of his Severance Benefit
shall cease as of the date he first again becomes a Participant in the Plan in
accordance with subsection 2.1. If a Participant is employed or reemployed by
the Company or an Affiliated Company after receiving a Severance Benefit
attributable to a prior period of employment by the Company or any Affiliated
Company, such prior period of employment shall be disregarded for purposes of
determining the amount of the Severance Benefit to which the Participant is
entitled on account of any subsequent termination of employment.
III.H. OTHER BENEFITS. The Severance Benefit to which a Participant is
entitled under this Section 3 shall be payable in addition to, and not in lieu
of, all other compensation and benefits accrued by or payable to the
Participant, including but not limited to, accrued vacation pay and benefits
payable under any pension or savings plan, or any life insurance, medical or
disability plan. In addition, the Participant and his eligible dependents will
be entitled to continue to be covered at the Employer's expense under the
Employer's health, dental, and life insurance plans as in effect at the
Participant's termination of employment, or under comparable plans, for a period
of 18 months following his Severance Date; provided however, that such benefits
shall cease upon the Participant's employment by a new entity under which
comparable benefits are available.
III.I. NONALIENATION. Participants shall not have any right to pledge,
hypothecate, anticipate, or in any way create a lien upon any benefits provided
under this Plan, and no benefits payable hereunder shall be assignable in
anticipation of payment, either by voluntary or involuntary acts, or by
operation of law. Nothing in this subsection 3.9 shall limit a Participant's
rights or powers to dispose of his property by will, limit any rights or powers
which his executor or administrator would otherwise have with regard to benefits
to which a Participant is entitled hereunder, or restrict any right of set-off,
counterclaim or recoupment which the Company or any other Affiliated Company may
otherwise have against any Participant.
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III.J. WITHHOLDING. All payments with respect to a Participant under this
Plan will be subject to applicable withholding of Federal, state, and local
taxes and other applicable deductions.
III.K. BENEFITS ON DEATH. In the event of a Participant's death after
becoming entitled to a benefit under the Plan but before complete payment of his
benefit, his benefit shall be paid to his estate.
III.L. RELEASE AGREEMENT. No Severance Benefit shall be payable to any
Participant unless such Participant executes a release (in a form approved by
the Committee) of all such Participant's claims against the Company and the
Affiliated Companies, to the extent that the basis of such claims arose before
the date such release is signed by the Participant, and the payment of the
Severance Benefit and other benefits under this Plan shall be subject to the
terms and conditions of such release agreement.
SECTION IV
COMMITTEE
IV.A. DUTIES AND AUTHORITY OF COMMITTEE. Except as otherwise specifically
provided in this Section 4, in controlling and managing the operation and
administration of the Plan, the Committee shall have the following discretionary
authority, powers, rights, and duties in addition to those vested in it
elsewhere in the Plan:
(1) to enforce the Plan in accordance with its terms and with such
applicable rules of procedure and regulations as may be adopted by the
Committee;
(2) to determine conclusively all questions arising under the Plan,
including the power to determine the eligibility of employees and the
rights of Participants to benefits under the Plan, to interpret and
construe the provisions of the Plan, and to remedy any ambiguities,
inconsistences or omissions of whatever kind;
(3) to employ or utilize agents, attorneys, accountants or other persons
(who may also be employed by or represent the Company or an Affiliated
Company) for such purposes as the Committee considers necessary or
desirable to discharge its duties; and
(4) to establish a claims procedure in accordance with section 503 of
ERISA.
The Committee shall act by a majority of its then members, by meeting or by
writing filed without a meeting.
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IV.B. COMMITTEE DECISION FINAL. To the extent permitted by law, any
interpretation of the Plan and any decision on any matter within the discretion
of the Committee made by it in good faith shall be binding on all persons. A
misstatement or other mistake of fact shall be corrected when it becomes known,
and the Committee shall make such adjustment on account thereof as it considers
equitable and practicable.
IV.C. EXERCISE OF COMMITTEE DUTIES. Notwithstanding any other provisions of
the Plan, the Committee shall discharge its duties hereunder solely in the
interests of the Participants entitled to benefits under the Plan and for the
exclusive purpose of providing benefits to Participants according to the terms
and conditions of the Plan. In exercising its authority under the Plan, the
Committee may allocate all or any part of its responsibilities and powers to any
one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it.
IV.D. INDEMNIFICATION OF THE COMMITTEE. The members of the Committee shall
be indemnified by the Company against any and all liabilities, losses, costs and
expenses (including legal fees and expenses) of whatsoever kind and nature which
may be imposed on, incurred by, or asserted against the Committee or any member
thereof by reason of duties or responsibilities hereunder if the Committee or
such member did not act dishonestly or in willful violation of the law or
regulation under which such liability, loss, cost or expense arises.
IV.E. INTERESTED COMMITTEE MEMBER. A member of the Committee may not decide
or determine any matter or question concerning his own benefits under the Plan
or how such benefits are to be paid unless such decision could be made by him
under the Plan if he were not a member of the Committee.
SECTION V
AMENDMENT OR TERMINATION
V.A. AMENDMENT OR TERMINATION. The Company may amend or terminate this Plan
at any time to take effect retroactively or otherwise; provided, however, that
no amendment or termination shall adversely affect the Plan benefits, if any,
payable with respect to Participants whose employment with the Company
terminated prior to such amendment or termination of the Plan.
V.B. SUCCESSORS. The obligations and rights of the Company under the Plan
shall be binding upon, and inure to the benefit of, any assignee or successor in
interest to the Company (whether direct or indirect, by purchase, merger,
consolidation or otherwise). The Company shall not merge or consolidate with any
other corporation, or liquidate or dissolve without
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making suitable arrangements for the payment of any benefits which are or may
become payable under the Plan.
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