EXHIBIT 10.6
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EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made and entered into as of
September 1, 2000 by and between Robert G. Higgins ("Higgins") and Banyan
Strategic Realty Trust (the "Trust").
WHEREAS, Higgins is the Trust's First Vice President/General Counsel
and provides legal services to the Trust as an independent contractor;
WHEREAS, the Trust is reviewing its strategic options and may, among
other things, engage in transactions as a precedent to liquidating and
dissolving the Trust;
WHEREAS, the Trust is desirous of retaining Higgins' services as an
employee instead of an independent contractor to ensure continuity and to
minimize certain of its legal expenses during the liquidation and
dissolution phase;
WHEREAS, Higgins is desirous of entering into an employment agreement
with the Trust on terms and conditions contained 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
Higgins do hereby agree as follows:
1. RECITALS. The recitals to this Agreement are incorporated by
reference into this Agreement and made a part of as though stated herein.
2. EMPLOYMENT DUTIES. The Trust agrees to initially employ
Higgins as Vice President/General Counsel and following the first annual
meeting of shareholders to be held after execution and delivery of this
Agreement as the First Vice President, General Counsel and Chief Operating
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.
3. PERFORMANCE. Higgins accepts the appointment described in
SECTION 2 of this Agreement and agrees to faithfully and diligently perform
the services described therein or assigned by the board of trustees.
4. EFFECTIVENESS; TERM. The term of this Agreement shall commence
as of September 1, 2000 and continue until October 31, 2002 unless sooner
terminated pursuant to SECTION 11 herein (the "Term").
5. BASE COMPENSATION. For the services rendered by Higgins
hereunder, the Trust shall pay Higgins a base salary at a rate equal to
$260,000 per annum (the "Base Salary") payable at the same time and in the
same manner in which payroll of the Trust is customarily paid, subject to
the following increases:
(a) commencing on January 1, 2001, the Base Salary shall be
increased to $275,000 per annum; and
(b) commencing on January 1, 2002, the Base Salary shall be
increased to $288,750 per annum.
6. OTHER COMPENSATION.
(a) RETENTION BONUS. Upon the expiration or termination of this
Agreement, provided that this Agreement is not terminated pursuant to
SECTION 11(a) OR SECTION 11(d), the Trust shall pay Higgins, in a lump sum,
an amount equal to fifty percent (50%) of the aggregate amount of Base
Salary paid to Higgins during the period commencing on November 1, 2000 and
ending on the date this Agreement expires or is terminated (the "Retention
Bonus"). The Retention Bonus due under this SECTION 6(a) shall be paid
within five (5) business days of expiration or termination of this
Agreement.
(b) SEVERANCE PAY. Upon expiration or termination of this
Agreement, provided that this Agreement is not terminated pursuant to
SECTION 11(a) OR SECTION 11(d), the Trust shall pay to Higgins, in a lump
sum, an amount equal to one full year of Base Salary at the then-current
payable rate determined pursuant to SECTION 5 (the "Severance Pay"). The
Severance Pay due under this SECTION 6(b) shall be paid within five (5)
business days of expiration or termination of this Agreement.
7. ADDITIONAL BENEFITS. During the term of this Agreement,
Higgins 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. Higgins
shall also be entitled to four weeks paid vacation per employment year and
shall be reimbursed by the Trust for all reasonable out-of-pocket business
expenses incurred by Higgins in connection with performing his duties under
this Agreement; provided, however, that Higgins 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 Higgins within a reasonable time after
receipt by the Trust of the appropriate documentation.
8. WITHHOLDING. All compensation and benefits paid to Higgins
hereunder shall be reduced by all federal, state, local and other
withholding and similar taxes and payments required by applicable law.
9. CONFIDENTIALITY. Higgins agrees that as a result of his
employment with the Trust, he has acquired, or will acquire, information of
a special and unique nature and value that is not generally known to the
public or to the Trust's industry regarding the Trust, including but not
limited to, business, financial and other records of the Trust and its
affiliates, including its and their joint venture partners, software
programs, employee records, mailing lists, tenant lists and profiles,
prospective tenant lists, accounts receivable and payable ledgers, plans
and projections, budgets, marketing data and other similar matters (all
such information being hereinafter referred to as "Confidential
Information"). Accordingly, Higgins:
(a) will not, except as otherwise authorized by the Trust, divulge
to any person, firm, corporation, limited liability company, or
organization (hereinafter referred to as "Third Parties"), or use or cause
or authorize any Third Parties to use, the Confidential Information, except
as required by law or court order; and
(b) upon termination of this Agreement, will deliver, destroy or
delete or cause to be delivered, destroyed or deleted, as the Trust may
request, any and all Confidential Information, including drawings,
notebooks, keys, data and other documents and materials belonging to the
Trust or its affiliates which is in his possession or under his control
relating to the Trust or its affiliates, or the business of the Trust,
regardless of the medium upon which it is stored, and will deliver to the
Trust any other property of the Trust or its affiliates which is in his
possession or under his control within five (5) business days of the
termination of this Agreement.
For purposes of this SECTION 9, the term "Confidential Information"
shall not include information which: (i) was in the public domain at the
time of execution of this Agreement; (ii) hereafter becomes part of the
public domain by publication or otherwise through no unauthorized action of
Higgins; or (iii) was received by Higgins through a source other than the
Trust which is not under an obligation of confidentiality to the Trust.
Higgins further acknowledges and agrees that the Confidential Information
is of great value to the Trust and its affiliates and that the restrictions
and agreements contained in this Agreement are reasonably necessary to
protect the Confidential Information and the goodwill of the Trust's
business.
Higgins acknowledges that a violation of the provisions of this
SECTION 9 will cause irreparable damage to the Trust, the amount of which
may be impossible to quantify, and Higgins therefore agrees and understands
that if this SECTION 9 is violated, the Trust shall be entitled to
injunctive relief in addition to any other remedies available to the Trust
at law or in equity.
10. [RESERVED]
11. TERMINATION. This Agreement and Higgins's employment 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:
i. conduct of Higgins which constitutes fraud,
misappropriation, embezzlement, gross negligence, or wilful or illegal
misconduct in connection with performing Higgins's duties under this
Agreement;
ii. any material act of dishonesty by Higgins in
connection with performing Higgins's duties under this Agreement that is
not covered in (i) above;
iii. the indictment or conviction of Higgins 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; or
iv. any material breach by Higgins of this Agreement,
which continues for a period of five (5) business days after written notice
detailing the breach from the Trust to Higgins; provided that no cure
period shall be required after the first breach.
If the Trust terminates this Agreement for Cause, the Trust
shall have no further obligation to pay Higgins any of the compensation or
benefits described in this Agreement, except for any Base Salary and
amounts or benefits due Higgins under SECTION 7 earned but unpaid through
the date of termination.
(b) TERMINATION BY REASON OF DISABILITY. The Trust may terminate
this Agreement if Higgins, in the reasonable judgment of the Trust's board
of trustees, is unable to perform his duties, with or without reasonable
accommodation, 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 Higgins in writing and pay
Higgins the Base Salary to the extent earned and unpaid, the Retention
Bonus, the Severance Pay and any amounts or benefits due Higgins under
SECTION 7, all to the date of termination, with the exception of medical
benefits which shall continue through the end of the Term. Amounts due
under this paragraph shall be paid within five (5) business days of
termination. Following termination under this paragraph, Higgins shall not
have the right to, and the Trust shall have no further obligation to pay,
other compensation or reimbursement of any other kind.
(c) TERMINATION BY REASON OF DEATH. The Trust may terminate this
Agreement if Higgins dies in which case Higgins'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 Higgins' estate or
beneficiaries as he may from time to time designate, all Base Salary, the
Retention Bonus and the Severance Pay all to the extent earned and unpaid
and any benefits or amounts due Higgins under SECTION 7 above, all to the
date of termination. Amounts due under this paragraph shall be paid within
five (5) business days of termination. Following termination under this
paragraph, the Trust shall not have any other liability or obligation to
Higgins's estate for other compensation or reimbursement of any other kind,
including, without limitation, incentive compensation.
(d) VOLUNTARY TERMINATION BY HIGGINS. Higgins may terminate this
Agreement at any time by notifying the Trust in writing at least thirty
(30) business days prior to the date of termination. Within five (5)
business days of the date of termination, the Trust shall pay Higgins all
benefits and other amounts due under SECTION 7 hereof plus all Base Salary
earned but unpaid through the date of termination; provided that following
termination under this paragraph, the Trust shall have no further
obligation to pay Higgins the Retention Bonus or the Severance Pay. If
Higgins fails to notify the Trust in the manner and time provided herein,
the Trust will have no obligation to Higgins for compensation or
reimbursement of any kind, except as otherwise required by law.
(e) OTHER TERMINATION BY THE TRUST. The Trust may terminate this
Agreement for any reason: (i) by notifying Higgins in writing at least
sixty (60) days prior to the date of termination; or (ii) upon the final
liquidation and dissolution of the Trust; provided that in either event the
Trust shall pay Higgins all Base Salary and Retention Bonus to the extent
earned and unpaid, the Severance Pay and any amounts due Higgins under
SECTION 7, all to the date of termination. Amounts due under this
paragraph shall be paid within five (5) business days of termination.
Following termination under this paragraph, Higgins 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 other severance compensation.
(f) CHANGE OF CONTROL. Higgins may terminate this Agreement by
written notice given to the Trust upon a "Change of Control." For purposes
of this SECTION 11(f), "Change of Control" shall mean: (i) 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; (ii) 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; (iii) all of the real
estate properties or business of the Trust are disposed of pursuant to a
merger, consolidation or other transaction whereby the shareholders of the
Trust immediately prior to such merger, consolidation or other transaction
retain 50% or less of the voting shares or other ownership/beneficial
interests of the entity or entities, if any, that succeed to or obtain the
business or properties of the Trust; (iv) the Trust combines with another
company and immediately after the combination, the shareholders of the
Trust immediately prior to the combination hold 50% or less of the voting
shares of the surviving entity; (v) any "person," as such term is used in
Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes
a "beneficial owner," as such term is used in Rule 13d-3 promulgated under
that Act, of 50% or more of the voting shares of the Trust; (vi) the
relocation of the Trust's executive offices to a location in
excess of 100 miles outside of the Chicago Loop area; (vii) a
material breach of this Agreement by the Trust which continues for a period
of five (5) business days after written notice detailing the breach from
Higgins to the Trust; and (viii) a material diminution of Higgins's duties,
responsibilities or authority, or the assignment to him of duties that are
inconsistent in any substantial respect with the position, authority or
responsibilities associated with the positions set forth in SECTION 2
herein. Upon termination, the Trust shall pay Higgins: (A) all Base Salary
and Retention Bonus to the extent earned and unpaid through the date of
termination, (B) any amounts due Executive under SECTION 7 to the date of
termination, and (C) the Severance Pay. Amounts due under this paragraph
shall be paid within thirty (30) business days of termination.
12. OTHER ACTIVITIES OF HIGGINS. Higgins shall devote such working
time and attention as is necessary to fulfill his responsibilities
hereunder. Higgins 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 Higgins from investing
in publicly-traded entities which are engaged in lines of businesses
similar to the Trust, continuing to serve as a director on the boards on
which Higgins serves as of the date of this Agreement, or continuing to
provide legal advice and counsel to clients so long as such activities do
not cause a conflict of interest with the Trust or diminish his
responsibilities hereunder.
13. NOTE MATURITY. Consistent with the Trust's retention and
severance policy for non-contractual employees, the Non-Recourse Promissory
Note, executed by Higgins on January 12, 2000, shall not mature until the
later of: (A) the date the Trust has distributed all of its assets to Trust
shareholders other than those assets reserved for contingent liabilities;
and (B) the termination or expiration of this Agreement; PROVIDED, HOWEVER,
notwithstanding the preceding sentence, the Note shall immediately mature
upon Higgins's voluntary termination of this Agreement pursuant to
SECTION 11(d) herein, or upon his termination for Cause pursuant to SECTION
11(a) herein.
14. NOTICE. Any notice required or permitted hereunder shall be
made in writing: (i) either by actual 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: L.G. Schafran
with copies to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attn: Michael J. Choate, Esq.
If to Higgins:
Mr. Robert G. Higgins
Attorney at Law
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
(312) 683-5539 (direct)
(312) 553-9800 (fax)
(630) 267-7209 (mobile)
with a copy to:
Michael D. Karpeles
Goldberg, Kohn, Bell, Black,
Rosenbloom & Moritz
55 E. Monroe Street
Suite 3700
Chicago, Illinois 60603
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.
15. 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
Higgins unless made in writing and signed by Higgins. The waiver by the
Trust or Higgins of the breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
16. ENTIRE AGREEMENT. This Agreement and an Indemnification
Agreement between Higgins and the Trust dated as of June 9, 1999 (the
"Indemnification Agreement") constitute all of the agreements between the
parties with respect to Higgins's rights 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
Higgins's employment except as set forth herein and in the Indemnification
Agreement.
17. 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.
18. 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 basic intent of the parties on the date hereof
19. ASSIGNMENT. Except as provided herein, Higgins 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.
20. 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.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
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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:L.G. Schafran
Title: Interim President and
Chief Executive Officer
ROBERT G. HIGGINS
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Robert G. Higgins