EXHIBIT 10.1
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EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made and entered into as of
October 26, 2000 by and between L.G. Schafran (the "Executive") and Banyan
Strategic Realty Trust (the "Trust").
WHEREAS, the Executive has been employed as the Trust's interim
president and chief executive officer since August 14, 2000;
WHEREAS, the Trust is desirous of entering into a written agreement
with Executive pursuant to which Executive will continue to serve as the
Trust's interim president and chief executive officer.
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 interim 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 Trust's board of trustees.
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. The term of this Agreement shall commence
as of August 14, 2000 and shall remain in effect unless sooner terminated
until February 13, 2002.
4. BASE COMPENSATION. For the services rendered by the Executive
hereunder, the Trust shall pay the Executive a base salary at a rate equal
to $200,000 per year (the "Base Salary") payable semi-monthly or at the
same time and in the same manner in which the payroll of the Trust is paid,
as determined by the Trust.
5. INCENTIVE COMPENSATION. In addition to the Base Salary, the
Trust shall pay the Executive incentive compensation equal to the greater
of: (a) an amount equal to the product of the Base Amount and the
applicable Liquidation Incentive Factor; and (b) the "Early Completion
Bonus" ("Incentive Compensation"). The amount of Incentive Compensation
payable hereunder will be reduced by the amount of any Incentive
Compensation previously paid to Executive. For purposes of calculating
amounts payable under this SECTION 5:
(A) "Applicable Liquidation Incentive Factor" shall mean the
percentage set forth in the last column of the table set forth as EXHIBIT A
hereto that corresponds to the present value of the amounts distributed to
holders of the Trust's beneficial interest set forth in the table; provided
that the Applicable Liquidation Incentive Factor shall be zero until such
time as the Present Value Aggregate Per Share Distributions equals or
exceeds $6.25 per share.
(B) "Base Amount" shall mean $300,000.
(C) "Early Completion Bonus" shall mean (i) $300,000 if the
"Present Value of Aggregate Per Share Distributions" paid by the Trust on
or before December 31, 2000 is equal to, or greater than, $6.00 per share
(the "Year End Early Completion Bonus"); or (ii) $225,000 if the "Present
Value of Aggregate Per Share Distributions" paid by the Trust after
December 31, 2000 but on or before March 31, 2001 is equal to, or greater
than, $6.00 per share and Executive did not achieve the Year End Early
Completion Bonus.
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(D) "Per Share Distribution Paid to Holders" shall mean: (i)
the amount of cash paid, or the fair market value of any distribution in
kind (as determined by the Trust's board of trustees exercising reasonable
business judgment) paid to the Trust's holders of beneficial interest
during the term of this Agreement, or after the term of this Agreement if
the transaction or event resulting in such payment or distribution was
initiated during the term of this Agreement with the material assistance of
Executive, 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. For these purposes, amounts expended by
the Trust to repurchase its securities or amounts realized by holders of
the Trust's securities as a result of a third-party tender offer shall be
treated as amounts distributed to the holders. Additionally, "Per Share
Distribution Paid to Holders" shall not include the distribution declared
by the Trust's board on October 13, 2000.
(E) "Present Value of Aggregate Per Share Distributions"
shall mean the sum of the Per Share Distribution Paid to Holders, in each
case, discounted from the date of payment to the date of this Agreement,
using a discount rate equal to 12% per annum.
The Trust shall pay the Executive any Incentive Compensation earned
under this SECTION 5 in cash no later than ten (10) business days after the
distribution triggering payment is paid to the holder of shares of
beneficial interest of the Trust.
6. ADDITIONAL BENEFITS. During the term of this Agreement,
Executive shall also participate in any benefit or deferred compensation
plan sponsored by the Trust, including, but not limited to, profit sharing
plans, dental and medical plans and disability insurance, if any.
Executive shall also be entitled to four (4) weeks paid vacation and shall
be reimbursed by the Trust for all reasonable out-of-pocket business
expenses incurred by 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 reimbursements shall be paid to the Executive within a reasonable time
after receipt by the Trust of the appropriate documentation.
7. WITHHOLDING. All compensation and benefits paid to Executive
hereunder shall be reduced by all federal, state, local and other
withholding and similar taxes and payments required by applicable law.
8 TERMINATION. This Agreement and the Executive may be
terminated as follows:
(A) TERMINATION FOR CAUSE. The Trust may terminate this
Agreement for "Cause." For purposes of this Agreement, "Cause" shall mean:
(a) conduct of the Executive amounting to fraud, embezzlement, gross
negligence, or wilful or illegal misconduct in connection with performing
Executive's duties under this Agreement; (b) any act of dishonesty by the
Executive in connection with performing Executive's duties under this
Agreement; (c) the indictment or conviction of Executive by a court of
proper jurisdiction of (or his written, voluntary and freely given
confession to) a crime which constitutes a felony or which results in
material injury to the Trust's property, assets or reputation; (d) any
failure by the Executive to perform or observe any duty assigned to
Executive hereunder or the breach by Executive of this Agreement, which
continues for a period of five (5) business days after written notice
detailing the breach from the Trust to the Executive; provided that no cure
period shall be required after the first breach; or (e) the reinstatement
by the Trust of Leonard G. Levine as president and chief executive officer.
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If the Trust terminates this Agreement for Cause as described
in (a)-(d), the Trust shall have no further obligation to pay Executive any
of the compensation or benefits described in this Agreement. If the Trust
terminates this Agreement for Cause as described in (e), the Trust shall be
obligated to pay Executive all Base Salary that Executive would have been
paid during the remaining term of this Agreement but for the termination
plus all Incentive Compensation described in SECTION 5 and any benefits or
other amounts due under SECTION 6 as though this Agreement had not been
terminated.
(B) TERMINATION BY REASON OF DISABILITY. The Trust may
terminate this Agreement if the Executive, in the reasonable judgment of
the Trust's board of trustees, is unable to perform his duties on account
of illness or physical or mental incapacity for a period of more than two
(2) months in any twelve (12) consecutive month period. To terminate, the
Trust must notify the Executive in writing and pay the Executive: (i) all
Base Salary and Incentive Compensation to the extent earned and unpaid
through the date of termination, (ii) any amounts or benefits due Executive
under SECTION 6 to the date of termination, with the exception of medical
benefits which shall continue through the expiration of this Agreement, and
(iii) "Adjusted Incentive Compensation." Amounts due under this paragraph
shall be paid within thirty (30) business days of termination, except for
Adjusted Incentive Compensation. "Adjusted Incentive Compensation" shall
mean the product of the Incentive Compensation that would have been paid to
Executive had the Agreement not been terminated and "Employment Period"
which for these purposes shall be equal to the fraction the numerator of
which is the number of days that Executive was employed by the Trust
pursuant to this Agreement and the denominator of which is the lesser of:
(i) 548; or (ii) the number of days from August 14, 2000 to the date of
final liquidation and dissolution of the Trust. Amounts owed for Adjusted
Incentive Compensation shall be paid at the time that Incentive
Compensation would have been paid under SECTION 5. The Executive shall not
have the right to, and the Trust shall have no further obligation to pay,
other compensation or reimbursement of any kind, including, without
limitation, incentive or severance compensation.
(C) TERMINATION BY REASON OF DEATH. The Trust may terminate
this Agreement if Executive dies in which case Executive's employment shall
be deemed to have terminated as of the last day of the month during which
his death occurs. Upon termination, the Trust shall pay his estate or his
beneficiaries as the Executive may from time to time designate: (i) all
Base Salary and Incentive Compensation to the extent earned and unpaid
through the date of termination, (ii) any benefits or amounts due Executive
under SECTION 6 to the date of termination, and (iii) Adjusted Incentive
Compensation. Amounts due under this paragraph shall be paid within thirty
(30) days of termination, except Adjusted Incentive Compensation which
shall be paid at the time that Incentive Compensation would have been paid
under SECTION 5. The Trust shall not have any other liability or
obligation to Executive's estate for other compensation or reimbursement of
any kind, including, without limitation, incentive or severance
compensation.
(D) VOLUNTARY TERMINATION BY EXECUTIVE. The Executive may
terminate this Agreement by notifying the Trust in writing at least thirty
(30) days prior to the date of termination. Within five (5) business days
of the date of termination, the Trust shall pay Executive all benefits and
other amounts due under SECTION 6 hereof plus all Base Salary and Incentive
Compensation earned but unpaid through the date of termination. If
Executive fails to notify the Trust in the manner and time provided herein,
the Trust will have no obligation to Executive for compensation or
reimbursement of any kind, including, without limitation, incentive and
severance compensation.
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(E) TERMINATION OF THE TRUST. The Trust may terminate this
Agreement upon the final liquidation and dissolution of the Trust;
provided, however, that the Trust shall pay to the Executive: (i) the
balance of the Base Salary that would have been paid to Executive but for
the dissolution and liquidation, (ii) any Incentive Compensation earned but
unpaid through the date of termination, and (iii) any benefits or other
amounts due under SECTION 6 to the date of termination.
(F) CHANGE OF CONTROL. The Executive may terminate this
Agreement by written notice given to the Trust upon a "Change of Control."
For purposes of this SECTION 8(F), "Change of Control" shall mean: (x) that
the members of the Trust's board of directors as of the date of this
Agreement fail to constitute a majority of the members of the board
provided that any individual becoming a member of the board who is
nominated by the board shall be treated as if he or she were a member of
the board as of the date of this Agreement; or (y) the shareholders of the
Trust adopt a plan of liquidation or take other action having the effect of
a plan of liquidation without the recommendation or approval of the board;
PROVIDED, HOWEVER, this SECTION 8(F) shall not apply if the Change of
Control results from a sale of the stock of the Company pursuant to a
tender offer recommended for approval by the Trust's board of trustees.
Upon termination, the Trust shall pay Executive: (i) all Base Salary and
Incentive Compensation to the extent earned and unpaid through the date of
termination, (ii) any amounts due Executive under SECTION 6 to the date of
termination, and (iii) Adjusted Incentive Compensation. Amounts due under
this paragraph shall be paid within thirty (30) business days of
termination, except Adjusted Incentive Compensation which shall be paid at
the time that Incentive Compensation would have been paid under SECTION 5.
9. OTHER ACTIVITIES OF EXECUTIVE. The Executive shall devote such
working time and attention as is necessary to fulfill 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 continuing to
serve as a director on the boards on which Executive serves as of the date
of this Agreement.
10. 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.
11. 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 addressed to the party to whom notice is to be given at the
party's respective address set forth below, or such other 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
150 South Wacker Drive
Chicago, Illinois 60606
Attn: General Counsel
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with copies to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attn: Michael J. Choate, Esq.
If to the Executive:
Mr. L.G. Schafran
Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
with a copy to:
Jay I. Gordon, Esq.
Greenberg Traurig
200 Park Avenue
New York, New York 10166
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.
12. 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.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the Executive's duties,
compensation and severance as an employee of the Trust, there are no
representations, warranties, agreements or commitments between the parties
hereto with respect to the Executive's employment except as set forth
herein.
14. 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. The parties agree that any suit,
action or proceeding with respect to this Agreement shall be brought in the
courts of Cook County in the State of Illinois or in the U.S. District
Court for the Northern District of Illinois. The parties hereto accept the
exclusive jurisdiction of those courts for the purpose of any such suit,
action or proceeding. Venue for any such action, in addition to any other
venue permitted by statute, will be Cook County, Illinois.
15. 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
16. 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.
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17. COST OF ENFORCEMENT. In any suit or proceeding seeking to
enforce the terms, covenants or conditions of this Agreement, the
prevailing party 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.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
19. PAYMENT OF EXECUTIVE'S FEES. The Trust agrees to pay to
Executive the reasonable cost of the attorney's fees incurred by Executive
in the negotiation and preparation of this Agreement, within thirty (30)
days of receipt by the Trust of a detailed accounting of such fees.
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IN WITNESS WHEREOF, this Agreement is entered into on the day and
year first written above.
BANYAN STRATEGIC REALTY TRUST
By:
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Name: Robert G. Higgins
Title: Vice President
EXECUTIVE
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L.G. Schafran
