EXHIBIT 10.1
------------
EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made and entered into as of
December 14, 1999 by and between Xxxxxxx X. Xxxxxx (the "Executive") and
Banyan Strategic Realty Trust (the "Trust").
WHEREAS, the Executive is employed as the Trust's President and Chief
Executive Officer pursuant to an employment agreement entered into as of
October 1, 1997 (the "Existing Employment Agreement");
WHEREAS, the election of Xxxxxx Xxxxxxxx, Xxxxxxx Xxxx, X.X. Xxxxxxxx
and Xxxxxxx X. Xxxxxx on December 13, 1999 to the Board of Trustees of the
Trust (the "Board") will constitute a Change of Control under the Existing
Employment Agreement (the "Board Change") entitling the Executive to
terminate the Existing Employment Agreement and receive certain payments
thereunder;
WHEREAS, the Trust is desirous of retaining the Executive to continue
to serve as the Trust's President and Chief Executive Officer;
WHEREAS, the Executive is willing to continue to serve as the Trust's
President and Chief Executive Officer and to waive his rights to terminate
the Existing Employment Agreement as a result of the Board Change, provided
the Trust enters into this Agreement with the Executive on the terms and
conditions set forth herein;
NOW THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Trust and
the Executive do hereby agree as follows:
1. EMPLOYMENT DUTIES. The Trust agrees to employ the Executive as
the President and Chief Executive Officer of the Trust to perform such
duties as may reasonably be assigned from time to time consistent with this
position by the Board.
2. PERFORMANCE. The Executive accepts the appointment described in
Section 1 of this Agreement and agrees to faithfully and diligently perform
the services described therein.
3. EFFECTIVENESS; TERM. This Agreement (other than Section 6
hereof) shall become effective upon a Triggering Event (as defined below)
(the date of such Triggering Event being the "Effective Date") and will
remain in effect until the end of the thirtieth month following such
Triggering Event (such 30 month period being the "Initial Term") and
thereafter shall automatically renew for six-month periods (each such six-
month period being a "Renewal Term", and the Initial Term together with any
Renewal Terms being the "Term") unless either party notifies the other in
writing no later than ninety (90) days prior to the end of the applicable
Initial Term or Renewal Term, as the case may be, of its desire to
terminate the Agreement as of the end of the term then in effect; provided,
however, that for this Agreement to become effective the Triggering Event
must occur prior to January 1, 2002 and the Executive must have remained in
the employ of the Trust through the date of the Triggering Event.
Notwithstanding any other provision of this Agreement, Section 6 hereof
shall become effective on the date hereof. On the Effective Date, the
Existing Employment Agreement shall terminate and be of no further force
and effect. For purposes of this Agreement, the term "Triggering Event"
shall mean the first to occur of (w) the date a Plan of Liquidation of the
Trust becomes effective, (x) the date the Trust sells all or substantially
all of its assets in a single transaction or series of related
transactions, (y) the date the Trust merges into any corporation,
association, trust or other organization where the Trust is not the
surviving entity and the successor of the Trust is not 50% or more
beneficially owned by the Trust's beneficial owner's prior to the merger
(either of (x) or (y) being a "Sale"); or (z) a Change of Control but only
if none of the events described in (w), (x) or (y) above have occurred.
4. SALARY. For the services to be rendered by the Executive
hereunder, the Trust shall pay the Executive a base salary (the "Base
Salary") at an annual rate of $210,000 per year during the Initial Term and
$250,000 per year during any Renewal Term.
5. INCENTIVE COMPENSATION. (a) As soon as practicable following the
Effective Date, the Trust shall pay to the Executive an amount equal to the
sum of (x) the remaining base salary (at a rate of $210,000 per annum) the
Executive would have been entitled to receive over the remaining period of
the Existing Employment Agreement had it not been terminated on the
Effective Date, (y) the excess of (i) $387,500 over (ii) all Additional
Compensation (as defined in the Existing Employment Agreement) which was
earned and paid or payable to the Executive between the date hereof and the
Effective Date, and (z) $210,000; provided, however, that the amounts
calculated under (x) and (y) above shall be discounted to present value
from when they would otherwise have been paid pursuant to the Existing
Employment Agreement utilizing a discount rate equal to the yield payable
on three-month Treasury bills on the Effective Date as published in the
Wall Street Journal plus 100 basis points. If the Effective Date is not a
business day, then such discount rate shall be determined by reference to
the Treasury xxxx yield on the last business day before the Effective Date.
(b) In addition, in the event that the Triggering Event is the date a
Plan of Liquidation became effective, the Executive will be able to earn
incentive compensation hereinafter referred to as "Liquidation
Compensation." The Executive will earn Liquidation Compensation each time
the Trust pays a distribution to its holders during the Term based on the
following formula: Liquidation Compensation equals the product of the
Liquidation Base Amount and the Applicable Liquidation Incentive Factor
less any Liquidation Compensation previously paid to the Executive during
the Term.
For purposes of calculating amounts payable under this Section 5(b):
(A) "Application Liquidation Incentive Factor" shall mean the
percentage set forth in the second column of the following table:
Present Value of Liquidation
Aggregate Per Share Distributions Incentive Factor
--------------------------------- ----------------
Less than $5.75 0%
$5.75 - $5.99 50%
$6.00 - $6.24 75%
$6.25 - $6.49 100%
$6.50 - $6.74 125%
$6.75 - $6.99 150%
$7.00 - $7.24 175%
$7.25 and over 200%
(B) "Liquidation Base Amount" shall mean four hundred twenty
thousand dollars ($420,000).
(C) "Per Share Distribution Paid to Holders" shall be equal
to (i) the cash paid or the non-cash value of the distributions, as
determined by the Board exercising reasonable business judgment, paid or
payable to the Trust's holders of beneficial interest during the Term,
including repurchase by means of an issuer tender offer or open market
repurchase plan conducted in accordance with Rule 10b-18 promulgated under
the Securities Exchange Act of 1934, as amended, or a tender offer, divided
by (ii) the number of shares of beneficial interest outstanding on the
record date of the distribution or, in the case of a tender offer or open
market repurchases, the number of shares of beneficial interest outstanding
on the business day before the tender offer or open market repurchase
program begins.
(D) "Present Value of Aggregate Per Share Distributions"
shall mean the sum of the Per Share Distribution Paid to Holders discounted
from the date of payment to the date that the Plan of Liquidation became
effective using a discount rate equal to 12% per annum.
To illustrate, if at the end of the first year of the Plan of
Liquidation the Trust pays a distribution equal to $6.50 per share to its
holders of beneficial interest, then the Trust will pay the Executive
Liquidation Compensation of $210,000, which is equal to the product of the
Liquidation Base Amount ($420,000) and the Applicable Liquidation Incentive
Factor, which in this case is 50% ($6.50 discounted at 12% for one year,
$5.80). If at the end of the second year the Trust pays a distribution
equal to $1.00 per share to its holders of beneficial interest, then the
Trust will pay the Executive, Liquidation Compensation of $315,000, which
is equal to the product of Liquidation Base Amount ($420,000) and the
Applicable Liquidation Incentive Factor, which in this case is 125%
(Present Value of Aggregate Per Share Distributions equal $6.60) less the
$210,000 paid in the previous year.
Payment of any Liquidation Compensation earned under this Section 5
shall be made in cash no later than ten (10) business days after a
distribution is paid to the holder of shares of beneficial interest of the
Trust.
6. WAIVER OF CHANGE OF CONTROL/BOARD CHANGE; AMENDMENTS TO EXISTING
EMPLOYMENT AGREEMENT; OPTIONS. (a) Notwithstanding the fact that this
Agreement shall not become effective until the Effective Date, the
Executive hereby waives, effective on the date hereof, any and all rights
and/or payments or benefits he may have or be entitled to pursuant to the
Existing Employment Agreement as a result of the Board Change or any Change
of Control (as defined in (b) below) occurring immediately prior to or
contemporaneously with a Triggering Event.
(b) The Existing Employment Agreement shall be amended, as of the
date hereof, so that "Change of Control", which was defined in Section 9(c)
of the Existing Employment Agreement, shall be defined as the date on which
the members of the Board on the date of this amendment fail to constitute
at least a majority of the Board; provided, however, that (i) any
individual becoming a member of the Board with the Executive's consent
shall be deemed to have been a Board member on the date of this amendment
and (ii) the Board position occupied by Xxxxxx Xxxxxxxx shall not be deemed
to have changed if such position is occupied by an employee of Morgens,
Waterfall, Vintiadis & Co., Inc. or an employee of one of its affiliates.
For purposes of this Agreement, "Change of Control" shall have the meaning
provided in this Section 6(b).
(c) All Options (as defined in the Existing Employment Agreement)
held by the Executive (or his permitted transferee) shall become fully
vested and exercisable on the date hereof and shall remain so for 30 days.
Following the 30 day period, any unexercised Options shall terminate and be
of no force and effect. In addition, the Trust agrees to lend to the
Executive (or his permitted transferee), a sufficient amount to permit him
to exercise his Options. The loan will be secured by the shares the
Executive (or his permitted transferee) receives upon exercise of his
Options and shall be evidenced by a note and pledge and security agreement
substantially in the form of Appendix 6A and 6B, respectively, to this
Agreement.
7. LIFE INSURANCE/DISABILITY BENEFITS. Except as provided herein,
during the term of this Agreement, the Trust shall continue to pay all
premiums when due on life insurance policy numbers 8,783,869 and 8,636,508
and issued by New England Mutual Life Insurance Company, the beneficiaries
of which shall be designated by the Executive. A copy of the policy
schedule and schedule of renewal premiums for each policy is attached
hereto as Annex A. If at any time during the term of this Agreement the
Executive is permanently unable to perform his duties hereunder by reason
of illness, accident or other disability (as confirmed by competent medical
evidence), then the Trust shall continue to pay Executive one hundred
percent (100%) of his Base Salary then in effect for six months following
the date of such disability (the "Disability Payment") to the extent such
period is not otherwise covered by insurance; (but with no obligation to
pay any Liquidation Compensation contemplated by this Agreement, except for
Liquidation Compensation previously earned but not paid, if any). Except
as otherwise provided in this Agreement, until the end of the Term, the
Trust shall continue to pay all premiums when due on policy number
8,059,767 issued on May 13, 1993 by Massachusetts Mutual Life Insurance
Company (f/k/a Connecticut Mutual Life Insurance Company) naming the
Executive as the insured. A copy of the policy specifications is attached
hereto as Annex B.
8. OTHER BENEFITS. The Executive shall be eligible for all non-wage
benefits the Trust provides generally to its other salaried employees. In
addition, the Trust shall reimburse the Executive for reasonable, ordinary
and necessary business expenses incurred by the Executive in connection
with performing his duties under this Agreement; provided, however, that
the Executive shall provide the Trust with an accounting conforming to
Internal Revenue Service or other requirements substantiating the nature of
all reimbursable expenses. All such reimbursements shall be payable to the
Executive within a reasonable time after receipt of the appropriate
documentation.
9. TERMINATION. The Trust may terminate the Executive's employment
at any time for any reason or no reason.
(a) Termination for Just Cause. The Trust may terminate this
Agreement for "Just Cause." For purposes of this Agreement, "Just Cause"
shall mean the occurrence of any one or more of the following events: (i)
the conviction or rendering of a civil judgment against the Executive for
theft or embezzlement of Trust property; (ii) the rendering of a civil
judgment against the Executive for breach of a duty of loyalty owed to the
Trust; (iii) conviction of the Executive of a felony resulting in injury to
the business, property or reputation of the Trust or any affiliate of the
Trust; or (iv) a decision rendered by an arbitrator, in an arbitration to
be initiated by the Trust that the Executive shall have refused to or
willfully failed to perform his material duties under this Agreement, shall
have committed intentional acts that caused material damage to the business
or property of the Trust, or performed his material duties under this
Agreement in a manner that constituted gross negligence which caused or is
causing material damage to the business or property of the Trust. The sole
purpose of such arbitration shall be
to determine whether the Trust has "Just Cause" to terminate the
Agreement of the Executive under (iv) hereof. The Trust shall not
terminate the Agreement or the Executive for "Just Cause" before the
Executive has been convicted or before a civil judgment has been rendered
against the Executive or before the Trust has obtained an arbitrator's
final decision regarding "Just Cause" as the case may be. If the Trust
terminates this Agreement or the Executive for "Just Cause" before
obtaining an arbitrator's final decision or before a civil judgment has
been rendered, the Trust shall be deemed to immediately and irrevocably
waive and release any and all grounds that it has or may have at the time
to terminate this Agreement or the Executive for "Just Cause." The
arbitration shall be final and binding and held in the City of Chicago
before a single arbitrator and in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect,
except as specifically otherwise provided in this Section 9. The
arbitrator shall be selected from a group of professionals associated with
JAM/Endispute and each party shall have the right to serve document
requests and up to twenty-five interrogatories and to take up to three
depositions each of which shall last no more than four hours. Except as
set forth below, the filing of the arbitration or initiation of a civil
proceeding shall not excuse any party from performing its obligations under
this Agreement; and during the pendency of the arbitration, all parties
shall continue to perform their respective obligations in good faith,
subject to any rights to terminate this Agreement that may be available to
any party other than for "Just Cause" except that the Trust may suspend or
place the Executive on leave, with pay, upon the commencement of any
criminal or civil proceeding (including arbitration) alleging any of the
events set forth in (i)-(iv) above.
(b) Termination by Executive. The Executive may terminate this
Agreement: (i) at any time by written notice given to the Trust at least
ninety (90) days in advance of the termination date set forth in the notice
("Executive Termination"); (ii) within 90 days following the Effective Date
if the Triggering Event was a Sale; (iii) within 30 days following a Change
of Control (as defined in Section 6(b)) if the Triggering Event was not a
Sale, or (iv) except for suspension as described in Section 9(a) above and
any reduction in authority or working conditions resulting solely form the
adoption or implementation of a plan of liquidation, if the Executive's
authority is materially reduced, if there has been a material adverse
change in the Executive's working conditions or if the Trust requires the
Executive to relocate from the Chicago metropolitan area and the Executive
refuses (any of (ii), (iii) or (iv) being a "Constructive Termination").
(c) Payment in case of Termination. (i) Except for the
Disability Payment and for payments which accrued or were payable prior to
the date of termination, upon a termination for "Just Cause", as a result
of the Executive's death of disability, or because of an Executive
Termination, the Trust shall have no further obligations hereunder,
including any obligation to pay the insurance premiums on the policies
referenced in Section 7 (although, in the event of death or disability, the
Executive may be entitled to benefits pursuant to the terms of a welfare
benefit plan (e.g., life insurance, disability, etc.) sponsored by the
Trust).
(ii) If the Trust terminates this Agreement or the Executive
for any reason other than for "Just Cause", death or disability (including
before an arbitrator has issued his or her final decision regarding "Just
Cause" pursuant to Section 9(a)(iv) or before a court has entered a civil
judgment, but excluding any termination as a result of the Executive's
death or disability) or if the Executive terminates this Agreement for a
Constructive Termination, the Trust shall, as its sole obligation: (A)
within 10 business days following his resignation form the Board, pay the
Executive all Base Salary which would have been paid to the Executive,
discounted to present value as described below, over the remainder of the
Term; (B)continue paying the premiums on the insurance policies referenced
in Section 7 hereof for the remainder of the Term; and (C) within 10
business days following his resignation from the Board, pay the Executive
the excess of (x) 180% of the Liquidation Base Amount, over (y) any
payments previously made pursuant to Section 5(b); provided, further that
the amount of the Base Salary due the Executive under (A) above shall be
discounted to present value as of the date of termination utilizing a
discount rate equal to the yield on three-month Treasury bills on the date
of termination as published in the Wall Street Journal plus 100 basis
points. If the date of termination is not a business day, then such
discount rate shall be determined by referenced to the Treasury xxxx yield
on the last business day before the termination date.
(iii) In the event of any termination of the Executive's
employment (other than as a result of death), the Executive shall, within
60 days following his receipt of written notice (the "60 Day Period") from
the Company requesting his resignation, resign any position he holds on the
Board. Notwithstanding any other provision of this Agreement, the
Executive shall not be entitled to any payments or benefits pursuant to
this Section 9 until after he has resigned any position he holds on the
Board. In the event that the Executive has not resigned such position
prior to the end of the 60 Day Period, then, notwithstanding any other
provision of this Agreement, the Executive shall not be entitled to receive
any payments or benefits pursuant to the provisions of this Section 9 or
any indemnification pursuant to Section 11 hereof and, in the event any
such payments or benefits have already been made or provided, then the
Executive agrees to return to the Trust any such payments and reimburse the
Trust for any such benefits.
10. OTHER ACTIVITIES OF EXECUTIVE. The Executive shall be required
to devote such working time and attention to the Trust's business as is
necessary to carry out his responsibilities hereunder. The Executive shall
not engage in any activity which may be adverse to the Trust's business,
appropriate or usurp business opportunities or engage or invest in
businesses or assets which compete directly or indirectly with the Trust.
Nothing contained herein shall prohibit the Executive from investing in
publicly-traded entities which are engaged in lines of businesses similar
to the Trust or from engaging in the real estate activities of Oak Realty
as such activities are conducted on the date of this Agreement. The
Executive shall not become an officer or ten percent (10%) shareholder of
any entity with the exception of Oak Realty. These obligations and
limitations shall be in addition to those provided by law.
11. INDEMNIFICATION. The Trust shall indemnify and hold harmless
the Executive from liabilities which the Executive may incur resulting from
or arising out of any act undertaken in connection with the Executive's
duties under the Agreement in the same manner and to the same extent as the
Trust is permitted to indemnify any trustee or other officer of the Trust
under the Trust's Amended and Restated Declaration of Trust, as may be
amended.
12. GENERAL PROVISION.
(a) Notice. Any notice required or permitted hereunder shall
be made in writing: (i) either by actual or delivery of the notice into the
hands of the party entitled; or (ii) by depositing the notice in the United
States mail certified or registered, return receipt requested, all postage
prepaid and addresses to the party to whom notice is to be given at the
party's respective address set forth below, or such address as the party
may from time to time designate by written notice to the other party.
If to the Trust:
Banyan Strategic Realty Trust
Suite 2900
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
with copies to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to the Executive:
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxx & Samotny Ltd.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
The notice shall be deemed to be received on the earlier of (i) the
date of its actual receipt by the party entitled thereto and (ii) the third
business day following the date of mailing.
(b) Amendment and Waiver. No amendment or modification to
this Agreement shall be valid or binding on the Trust unless made in
writing and signed by an officer of the Trust duly authorized by the Board
or upon the Executive unless made in writing and signed by the Executive.
The waiver by the Trust or the Executive of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
(c) Entire Agreement. This Agreement shall, on the Effective
Date, constitute the entire agreement between the parties with respect to
the Executive's duties, compensation and severance as an employee of the
Trust, there are representations, warranties, agreements or commitments
between the parties hereto with respect to the Executive's employment
except as set forth herein.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of
conflicts) of the State of Illinois.
(e) Severability. If any provision of this agreement shall,
for any reason, be held unenforceable, the provision shall be severed from
this Agreement unless, as a result of severance, the Agreement fails to
reflect the basis intent of the parties on the date hereof. If the
Agreement reflects the basic intent of the parties on the date hereof, then
the invalidity of any specific provision shall not affect the
enforceability of any other provision herein, and the remaining provisions
shall remain in full force and effect.
(f) Assignment. Except as provided herein, the Executive may
not, under any circumstances delegate any of his rights and obligations
hereunder without the prior written consent of the Trust. This Agreement
and all of the Trust's rights and obligations hereunder may be assigned or
transferred by it, in whole or in part, to be binding upon and inure to the
benefit of any subsidiary or successor of the Trust.
(g) Cost of Enforcement. In any suit or proceeding seeking to
enforce the terms, covenants or conditions of this Agreement, the
prevailing parties shall, in addition to all of the remedies and relief
that may be available under this Agreement or applicable law, recover his
or its reasonable attorneys' fees and costs as shall be determined and
awarded by the court or the arbitrator.
(h) Withholding. The Trust shall be entitled to withhold from
payment any amount of withholding required by law.
(i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original.
IN WITNESS WHEREOF, this Agreement is entered into on the day
and year first written above.
BANYAN STRATEGIC REALTY TRUST
By: _________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
EXECUTIVE
___________________________
Xxxxxxx X. Xxxxxx
