Exhibit 10.9
(MODEL) CHANGE IN CONTROL AGREEMENT
This Agreement between GREAT LAKES REIT INC., (the "Company") and
XXXXXXX X. MAY ("Executive"), is made as of the 20th day of November, 1997 and
supercedes the Change in Control Agreement between the parties dated as of the
24th day of September, 1996.
RECITALS:
A. The Company wishes to attract and retain well-qualified executive and
key management personnel and to assure itself of the continuity of its
management.
B. Executive is an officer or other key executive of the Company with
significant management responsibilities in the conduct of the Company's
business.
C. The Company recognizes that Executive is a valuable resource of the
Company and the Company desires to be assured of the continued services of
Executive.
D. In the regular course of his employment by the Company, Executive
acquires significant confidential information about the suburban office building
market, including but not limited to leasing patterns and trends, acquisition
and disposition prospects, and sources of capital.
E. The Company is concerned that in a possible change in control of the
Company, Executive may have concerns about the continuation of employment status
and responsibilities and may be approached by others offering competing
employment; the Company therefore desires to provide Executive with assurances
as to the continuation of employment status and responsibilities in such event.
F. The Company further desires to assure that if a possible change in
control arises and Executive is involved in deliberations or negotiations in
connection with it, Executive will be in a secure position to consider and
participate in such a transaction as objectively as possible and in the best
interests of the Company; the Company therefore desires to protect Executive
from any direct or implied threat to his financial well-being.
G. Executive is willing to continue to serve as an Executive of the
Company and to make certain covenants with the Company, but Executive desires
assurance that in the event of a change in control he will continue to have the
employment compensation, benefits, and responsibilities he could reasonably
expect absent such event, and that, in the event such is not possible, he will
have fair and reasonable severance protection.
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Operation of Agreement.
(a) The "effective date of this Agreement" shall be the date
on which a change in control of the Company (as described in Section 3) occurs.
Until there is a change in control of the Company as defined in Section 3, the
Company will continue to employ Executive as an employee at will, and Executive
hereby acknowledges that he is an employee at will of the Company. The Company
will have no obligation hereunder, if the employment of Executive with the
Company terminates prior
to a change in control of the Company. Executive will have no right on account
of this Agreement to be retained in the employ of the Company or to be retained
in any particular position in the Company, unless and until a change in control
of the Company has occurred.
(b) For the period commencing on the date of a change in
control of the Company and ending on the last day of the month in which occurs
the second anniversary of the change in control of the Company (the "Employment
Period"), the Company hereby agrees to continue to employ Executive. During the
Employment Period, Executive shall exercise such authority and perform such
responsibilities as are commensurate with the authority being exercised and
duties being performed by Executive immediately prior thereto, which services
shall be performed at the location where Executive was employed immediately
prior there or at such other location as the Company may reasonably require;
provided, however, that Executive shall not be required to accept any such other
location that Executive deems unreasonable in the light of his personal
circumstances. Executive agrees that during the Employment Period he shall
faithfully and efficiently devote his full business time exclusively to the
responsibilities and duties to the Company.
2. Non-competition, Confidentiality and Nonsolicitation Covenants.
(a) If there is a Termination (as defined in Section 5) of
Executive's employment with the Company, Executive shall not during the
Employment Period, without the written consent of the Company, engage, directly
or indirectly, in any business enterprise ("Competitor") which is (a) in the
business (in whole or in part) of investing in suburban office building (b) in
any geographic metropolitan market in which the Company was competing as of the
date of the termination of Executive's employment; provided, however, that
Executive shall be permitted to acquire a stock or other ownership interest in a
Competitor provided such stock or other ownership interest is publicly traded
and the stock or other ownership interest is not more than 1% of the outstanding
shares or other ownership interest of such Competitor. Executive agrees that
this limited period of non-competition is reasonable and necessary to protect
the Company's legitimate business interests.
(b) If there is a Termination of Executive's employment with
the Company, he will not during the Employment Period and thereafter divulge or
appropriate to his own use or the use of others any secret or confidential
information pertaining to the business of the Company or any of its subsidiaries
obtained during employment by the Company, it being understood that this
obligation shall not apply when and to the extent any of such information
becomes publicly known or available other than because of Executive's act or
omission.
(c) If there is a Termination of Executive's employment with
the Company, Executive will not during the Employment Period, directly or
indirectly, solicit or hire any key employee of the Company, assist in the
solicitation or hiring or such a key employee by any other person, or encourage
any such key employee to terminate his employment with the Company.
3. Change in Control. A "Change in Control" shall mean if at any time any
of the following events shall have occurred:
(a) The Company is merged or consolidated or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Common Shares immediately prior to such transaction;
(b) The Company sells or otherwise transfers all or substantially all
of its assets to any other corporation or other legal person, and less than a
majority of the combined voting power of the then-outstanding securities of such
corporation or person immediately after such sale or transfer is held in the
aggregate by the holders of Common Shares immediately prior to such sale or
transfer;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated pursuant to the
Exchange Act, disclosing that any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of
securities representing 20% or more of the Voting Power;
(d) The Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in response to
Form 8-K or Schedule 14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing contract or
transaction; or
(e) If during any period of two consecutive years, individuals who at
the beginning of any such period constitute the directors of the Company cease
for any reason to constitute at least a majority thereof, unless the election,
or the nomination for election by the Company's stockholders, of each director
of the Company first elected during such period was approved by a vote of at
least two-thirds of the directors of the Company then still in office who were
directors of the Company at the beginning of any such period.
Notwithstanding the foregoing provisions of Section 11(c) and (d)
above, a "Change in Control" shall not be deemed to have occurred, (i) solely
because (A) the Company; (B) a Subsidiary; or (c) any Company-sponsored employee
stock ownership plan or other employee benefit plan of the Company either files
or becomes obligated to file a report or proxy statement under or in response to
Schedule 13D, Schedule 14D-l, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act, disclosing
beneficial ownership by it of shares, whether in excess of 20% of the Voting
Power or otherwise, or because the Company reports that a change of control of
the Company has or may have occurred or will or may occur in the future by
reason of such beneficial ownership, or (ii) solely because of a change in
control of any Subsidiary.
4. Compensation and Benefits. During the Employment Period, Executive shall
receive the following compensation and benefits:
(a) Executive shall receive an annual base salary which is not
less than the highest monthly base salary paid to Executive by the Company
during the twelve-month period immediately prior to the effective date of this
Agreement, with the opportunity for increases from time to time thereafter which
are in accordance with the Company's regular executive compensation practices.
(b) Executive shall be eligible to participate on a reasonable
basis, and to continue his existing participation in, annual incentive, stock
option, restricted stock, long-term incentives, and any other incentive
compensation plans which provide opportunities to receive compensation in
addition to annual base salary, to the extent of the opportunities provided by
the Company for executives with comparable duties or level of responsibility and
authority.
(c) Executive shall be entitled to receive and participate in
salaried employee benefits and perquisites (including, but not limited to,
medical, life, accident insurance, disability benefits, savings plan, welfare
benefit, and retirement plan participation), which are the greater of: (i) the
employee benefits and perquisites provided by the Company to executives with
comparable duties, or (ii) the employee benefits and perquisites to which
Executive was entitled or in which Executive participated at any time during the
120-day period immediately prior to the effective date of this Agreement.
5. Termination. The term "Termination" shall mean termination of the
employment of Executive with the Company after a change in control of the
Company and prior to the expiration of the Employment Period, for any reason
other than death, disability (as defined below), cause (as defined below), or
voluntary resignation (as defined below).
(a) The term "disability" means physical or mental incapacity
qualifying Executive for long-term disability under the Company's long term
disability plan.
(b) The term "cause" means: (i) the willful and continued
failure of Executive to substantially perform his duties with the Company (other
than any failure due to physical or mental incapacity) after a demand for
substantial performance is delivered to him by the Board of Directors which
specifically identifies the manner in which the Board believes he has not
substantially performed his duties, or (ii) willful misconduct or willful
illegal conduct which is materially injurious to the Company. No act or failure
to act by Executive shall be considered "willful" unless done or omitted to be
done not in good faith and without reasonable belief that the action or omission
was in the best interests of the Company. The unwillingness of Executive to
accept any or all of a change in the nature or scope of duties or level of
responsibility and authority, a reduction in total compensation or benefits, a
relocation Executive deems unreasonable in light of his personal circumstances,
or other action by or at the request of the Company in respect of Executive's
position, authority, or responsibility that he reasonably deems to be contrary
to this Agreement, may not be considered by the Board of Directors to be a
failure to perform, misconduct or illegal conduct by Executive. Notwithstanding
the foregoing, Executive shall not be deemed to have been terminated for cause
for purposes of this Agreement unless and until there shall have been delivered
to Executive a copy of a resolution, duly adopted by a vote of three-quarters of
the entire Board of Directors of the Company at a meeting of the Board called
and held (after reasonable notice to Executive and an opportunity for Executive
and his counsel to be heard before the Board) for the purpose of considering
whether Executive has been guilty of such a willful failure to perform, or such
willful misconduct or illegal conduct, as justifies termination for cause
hereunder, finding that in the good faith opinion of the Board, Executive has
been guilty thereof and specifying the particulars thereof.
(c) The resignation of Executive shall be deemed "voluntary"
if it is for any reason other than one or more of the following, each a "good
reason":
(i) Executive's resignation or retirement is
requested by the Company other than for cause;
(ii) any significant change in the nature or
scope of Executive's duties or level of authority and responsibility from
those described in Section 3; provided, however, that a change in job title
or in the name of the office or position held shall not be deemed a
"significant change", nor shall it be deemed a factor in any determination of
whether there has been a "significant change", within the meaning of this
Section 5(c)(ii);
(iii) any reduction in Executive's total compensation or benefits from that
provided in Section 4, if that reduction in compensation or benefits is unique
to Executive and is not part of a reduction in compensation or benefits
applicable to substantially all of the Company's employees;
(iv) a breach by the Company of any other material provision of this
Agreement; or
(v) a reasonable determination by Executive that, as a result of a change
in control of the Company and a change in circumstances thereafter significantly
affecting his position, Executive is unable to exercise the authority and
responsibility described in Section 3; provided, however, that a change in job
title or in the name of the office or position held shall not be deemed to be a
change in circumstances "significantly affecting" his position, nor shall it be
deemed a factor in any determination of either whether the Executive's position
has been significantly effected, or whether he is unable to exercise the
authority and responsibility described in Section 3.
(d) Termination that entitles Executive to the payments and
benefits provided in Section 6 shall not be deemed or treated by the Company as
the termination of Executive's employment or the forfeiture of his
participation, award, or eligibility for the purpose of any plan, practice or
agreement of the Company referred to in Section 4.
6. Termination Payments and Benefits. In the event of a Termination, the
Company shall pay to Executive the following cash payments when such payments
would otherwise have been paid in the regular course of business as if the
Termination did not occur:
(a) base salary and all other benefits due Executive as if he
had remained an employee pursuant to this Agreement through the remainder of the
month in which Termination occurs, less applicable withholding taxes and other
authorized payroll deductions;
(b) the amount equal to the target cash bonus and other
incentive awards for Executive under the Company's annual incentive compensation
plan for the fiscal year in which Termination occurs, reduced pro rata for that
portion of the fiscal year not completed as of the end of the month in which
Termination occurs; provided, however, that if Executive has deferred his award
for such year under the plan, the payment due Executive under this paragraph (b)
shall be paid in accordance with the terms of the deferral;
(c) other unpaid compensation and vacation pay; and
(d) a severance allowance equal to the sum of the
following:
(i) an amount equivalent to twice his annual
base salary at the rate in effect immediately prior to Termination, less any
sums paid to Executive by the Company as base salary for the Employment Period
through the end of month in which the Termination occurred; plus
(ii) an amount equivalent to twice the average
annual incentive compensation received by Executive for the three fiscal years
immediately prior to the fiscal year in which Termination occurs, less any
sums paid to the Executive by the Company as incentive compensation for the
Employment Period through the end of the month in which the termination
occurred.
In addition to the foregoing, the Company shall pay or otherwise provide to
Executive all of the following:
(e) During the remainder of the Employment Period, Executive
shall continue to be deemed and treated as an eligible employee under the
provisions of all stock option, restricted stock, and other incentive
compensation plans of the Company under which Executive held options or awards
or in which Executive participated at the time of Termination, and he may
exercise options and rights, and shall receive payments and distributions
accordingly.
(f) During the remainder of the Employment Period, Executive
shall continue to participate in and be entitled to all benefits and credited
service for benefits under the benefit plans, programs and arrangements
described in Section 4(c) as if he remained employed by the Company at the
compensation levels referred to in this Section 6 during such period, exclusive,
however, of disability benefits.
(g) Section 4 shall be applicable in determining the payments
and benefits due Executive under this Section 6, and if Termination occurs after
a reduction in all or any part of Executive's total compensation or benefits,
the severance allowance and other compensation and benefits payable to Executive
pursuant to this Section 6 shall be based upon compensation and benefits before
the reduction.
(h) If any provision of this Section 6 cannot, in whole or in
part, be implemented and carried out under the terms of the applicable
compensation, benefit, or other plan or arrangement of the Company because
Executive has ceased to be an actual employee of the Company, because he has
insufficient or reduced credited service based upon actual employment by the
Company, because the plan or arrangement has been terminated or amended after
the effective date of this Agreement, or for any other reason, the Company
itself shall pay or otherwise provide the equivalent of such rights, benefits,
and credits for such benefits to Executive, his dependents, beneficiaries and
estate.
(i) The Company's obligation under this Section 6 to continue
to pay or provide health care and life and accident insurance to Executive
during the remainder of the Employment Period shall be reduced when and to the
extent any of such benefits are paid or provided to Executive by another
employer, provided that Executive shall have all rights afforded to retirees to
convert group insurance coverage to individual coverage as, to the extent of,
and whenever Executive's group insurance coverage under this Section 6 is
reduced or expires.
(j) The Company shall deduct applicable withholding taxes
in performing its obligations under this Section 6.
(k) Except for Section 6(i) above, Executive shall have
no obligation to mitigate damages.
Nothing in this Section 6 is intended, or shall be deemed or
interpreted, to be an amendment to any compensation, benefit, or other plan of
the Company. To the extent the Company's performance under this Section 6
includes the performance of the Company's obligations to Executive under any
such plan or under another agreement between the Company and Executive, the
rights of Executive under such plan or other agreement, as well as under this
Agreement, are discharged, surrendered, or released pro tanto.
7. Parachute Payment Limitation. Notwithstanding any provision of this
Agreement to the contrary, the aggregate present value of all parachute payments
payable to or for the benefit of Executive, whether payable pursuant to this
Agreement or otherwise, shall be one dollar less than three (3) times
Executive's base amount and, to the extent necessary, payments under this
Agreement and any parachute
payments payable under any other agreement between Executive and the Company
shall be reduced in order that this limitation not be exceeded. The terms
"parachute payment," "base amount" and "present value" shall have the meanings
assigned thereto under Section 280G of the Code. It is the intention of this
Section 7 to avoid excise taxes on Executive under Section 4999 of the Code and
the disallowance of a deduction to the Company pursuant to Section 280G of the
Code. The determination of whether any reduction in the amount of parachute
payments is required under this Section 7 shall be made by the Company's
independent accountants, and Executive shall be entitled to select the parachute
payments that will remain payable after the application of this Section 7. The
fact that Executive has payments under this Agreement reduced as a result of the
limitations set forth in this Section 7 will not of itself limit or otherwise
affect any rights of Executive arising other than pursuant to this Agreement.
8. Arrangements Not Exclusive or Limiting. The specific arrangements
referred to herein are not intended to exclude or limit Executive's
participation in other benefits available to executive personnel generally, or
to preclude or limit other compensation or benefits as may be authorized by the
Board of Directors of the Company at any time, or to limit or reduce any
compensation or benefit to which Executive would be entitled but for this
Agreement.
9. Enforcement Costs. The Company is aware that upon the occurrence of
a change in control of the Company, the Board of Directors or a stockholder of
the Company may then cause or attempt to cause the Company to refuse to comply
with its obligations under this Agreement, or may cause or attempt to cause the
Company to institute, or may institute, litigation, seeking to have this
Agreement declared unenforceable, or may take, or attempt to take, other action
to deny Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is the
intent of the parties that Executive not be required to incur the legal fees and
expenses associated with the protection or enforcement of rights under this
Agreement by litigation or other legal action because such costs would
substantially detract from the benefits intended for Executive hereunder, nor be
bound to negotiate any settlement of rights hereunder under threat of incurring
such costs. Accordingly, if at any time after a change in control of the
Company, it should appear to Executive that the Company is or has acted contrary
to or is failing or has failed to comply with any of its obligations under this
Agreement for the reason that it regards this Agreement to be void or
unenforceable or for any other reason, or that the Company has purported to
terminate his employment for cause or is in the course of doing so, in either
case contrary to this Agreement, or in the event that the Company or any other
person takes any action to declare this Agreement void or unenforceable or
institutes any litigation or other legal action designed to deny, diminish or to
recover the benefits provided or intended to be provided to Executive hereunder,
and Executive has acted in good faith to perform his obligations under this
Agreement, the Company irrevocably authorizes Executive from time to time to
retain counsel of his choice at the expense of the Company to represent
Executive in connection with the protection and enforcement of his rights
hereunder, including without limitation representation in connection with
termination of employment contrary to this Agreement or with the initiation of
defense of any litigation or other legal action, whether by or against Executive
or the Company or any director, officer, stockholder, or other person affiliated
with Company, in any jurisdiction. The reasonable fees and expenses of counsel
selected from time to time by Executive as hereinabove provided shall be paid or
reimbursed to Executive by the Company on a regular, periodic basis upon
presentation by Executive of a statement or statements prepared by such counsel
in accordance with its customary practices, up to a maximum aggregate amount of
$100,000. Counsel so retained by Executive may be counsel representing other
officers or key executives of the Company in connection with the protection and
enforcement of their rights under similar agreements between them and the
Company and, unless in Executive's sole judgment use of common counsel could be
prejudicial to him would not be likely to reduce the fees and expenses
chargeable hereunder to the Company, Executive agrees to use his best efforts to
agree with such other officers or executives to retain common counsel.
10. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be in writing and personally delivered by
hand or sent by registered or certified mail, if to Executive, at the last
address Executive has filed in writing with the Company, and if to the Company,
to its corporate secretary at its principal executive offices.
11. Non-Alienation. Executive shall not have any right to pledge,
hypothecate, anticipate, or in any way create a lien upon any amounts provided
under this Agreement, and no payments or benefits due hereunder shall be
assignable in anticipation of payment either by voluntary or involuntary acts or
by operation of law. So long as Executive lives, no person, other than the
parties hereto, shall have any rights under or interest in this Agreement or the
subject matter hereof.
12. Entire Agreement; Amendment. This Agreement constitutes the
entire agreement of the parties in respect of the subject matter hereof. No
provision of this Agreement may be amended, waived, or discharged except by the
mutual written agreement of the parties. The consent of any other person to
any such amendment, waiver, or discharge shall not be required.
13. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns, by operation of
law or otherwise, including without limitation any corporation or other entity
or person which shall succeed (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and
assets of the Company, and the Company shall require any successor, by agreement
in form and substance satisfactory to Executive, to expressly assume and agree
to perform the Agreement. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of Executive and his legal
representatives, heirs, and assigns; provided, however, that in the event of
Executive's death prior to payment or distribution of all amounts,
distributions, and benefits due him hereunder, each unpaid amount and
distribution shall be paid in accordance with this Agreement to the person or
persons designated by Executive to the Company to receive such payment or
distribution and if Executive has made no applicable designation, to the person
or persons designated by Executive as beneficiary or beneficiaries of proceeds
of life insurance payable in the event of Executive's death under the Company's
group life insurance plan.
14. Governing Law. Except to the extent required to be governed
by the law of the State of Maryland because the Company is incorporated under
the laws of that State, the validity, interpretation, and enforcement of this
Agreement shall be governed by the law of the State of Illinois, excepting its
choice of law provisions.
15. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be original but all of which
together constitute one and the same instrument.
IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Company has caused these
presents to be executed.
Great Lakes REIT, Inc.
By: __________________________________
Its: Xxxxxxx X. Xxxxxx, Secretary
By: __________________________________
Xxxxxxx X. May
