EXHIBIT 10 (iii)
- ----------------
AMENDMENT
TO
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amendment to Second Amended and Restated Employment Agreement
(this "Amendment") is made and entered into as of March 19, 1997 by and
between Leonard G. Levine (the "Executive") and Banyan Strategic Realty
Trust (the "Fund").
RECITALS:
A. The parties previously entered into a Second Amended and
Restated Employment Agreement made as of December 31, 1992 (the "Employment
Agreement").
B. The parties desire to amend certain provisions of the
Employment Agreement.
NOW THEREFORE, in consideration of the promises, mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Fund and
the Executive agree as follows:
1. AMENDMENT OF EMPLOYMENT AGREEMENT. Subject to the conditions
set forth in Section 2 hereof, the Employment Agreement is amended as
follows:
a. SECTION 6(c) is deleted in its entirety and replaced by
the following:
Payment of the Additional Compensation computed under this
Section 6 shall be made on March 15 of the year following the period for
which the award is made. One hundred percent (100%) of the award shall be
paid in shares of the Fund ("Award Shares"), provided that for fiscal years
ended prior to January 1, 1996; the Additional Compensation shall be paid
80% in cash and 20% in Award Shares. The Award Shares issued pursuant to
this Section 6(c) shall not be transferred prior to the date which is
seventy-five (75) days after the Computation Date (as defined in
Section 6(d) (the "Vesting Date")); provided that eighty percent (80%) of
the Award Shares distributed to the Executive in respect of Additional
Compensation earned for the fiscal year ended December 31, 1996 shall
immediately vest upon Stockholder Approval as defined in SECTION 2 of this
Amendment (the "Additional Incentive Shares") and may be immediately
transferred, pledged or otherwise freely alienated in compliance with the
registration requirements of federal and state securities law or exemptions
therefrom following such Stockholder Approval. The Award Shares, except
for the Additional Incentive Shares, shall be subject to forfeiture in
accordance with the provisions of Section 6(d) and any Certificate
representing all or any portion of the Award Shares shall bear an
appropriate legend and shall be held by the Fund in trust for the Executive
pending the lapse of the forfeiture provisions under Section 6(d). At the
request of Executive, the Additional Incentive Shares may be separately
certificated. The number of Award Shares distributable to the Executive
shall be based upon the average closing price of the Fund's stock for the
five (5) business days ended prior to December 31 of the calendar year for
which the payments are made. Subject to the provisions of Section
2(b)(iii)-(iv) of this Amendment, the Executive shall be entitled to
receive and retain all dividends paid on the Award Shares held by him,
including those shares held in trust by the Fund for the Executive. The
Fund, at its sole cost, shall take all reasonable steps necessary to cause
the filing of a registration statement and listing application
1
to be effective as soon after the Vesting Date as practical,
with respect to the Award Shares, with the appropriate regulatory bodies,
on terms more fully set forth in the Registration Rights Agreement to be
entered into pursuant to the provisions of Section 3 of this Amendment.
b. SECTION 6(d) shall be amended and restated in its
entirety as follows:
(d) As soon as practicable after December 31, 1997, or, if
earlier, upon the termination of the Executive's employment ("Computation
Date") the computation provided in Section 6(b) will be computed on a
cumulative basis covering the period January 1, 1993 through the
Computation Date; provided, however, that for such computation the Adjusted
Cash Flow shall also include all unrealized profits and gains generated in
connection with Reinvestment Activities. In connection therewith, the
parties further agree that the definition of "Net Income" in Section 6(a)
of the Employment Agreement shall exclude the financial accounting effect
of straight lining rents.
(i) In the event that the total cumulative Additional
Compensation as recomputed at the Computation Date exceeds the aggregate
Additional Compensation paid to the Executive, the Fund shall award to the
Executive, no later than the Vesting Date, a number of Award Shares equal
in value to this excess (the "Final Award Shares").
(ii) In the event that the cumulative Additional
Compensation as recomputed at the Computation Date is less than the
aggregate amount of the Additional Compensation paid to the Executive, all
or a portion of the Award Shares, except for the Additional Incentive
Shares (the "Forfeitable Shares"), shall be forfeited and returned to the
Fund. In determining the amount of the Forfeitable Shares, each Award
Share shall be valued at the average price at which the Shares were valued
when issued to the Executive under Section 6(c). For example, if the
Executive holds 100,000 Award Shares with an average value determined under
Section 6(c) at the time of issue of $3.00 and the cumulative Additional
Compensation at the Computation Date is determined to be $45,000 less than
the amount actually paid to the Executive, the Executive shall return up to
15,000 Forfeitable Shares to the Fund without regard to the actual current
value of those shares. Certificates representing the balance of any Award
Shares shall be delivered to the Executive promptly after the Vesting Date.
(iii) Payment of the Additional Compensation computed
under this Section 6(d) shall be made no later than the Vesting Date.
Except as provided herein, all of the Additional Compensation under this
Section 6(d) shall be payable in Award Shares. The number of Final Award
Shares to be issued pursuant to Section 6(d)(i) above shall be calculated
by dividing the Additional Compensation computed under Section 6(d) by
the average closing price of the Fund's stock for the five (5) business
days ended prior to December 31, 1997. The Final Award Shares shall:
(A) bear appropriate legends; and (B) be transferrable only in compliance
with the registration requirements of federal and state securities law or
exemptions therefrom.
2
c. SECTION 17(a) is deleted in its entirety and replaced by
the following:
(a) 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 thereunder entitled, or (ii) by the mailing of the
notice in the United States mail, certified or registered mail, return
receipt requested, all postage prepaid and addressed to the party to who
the notice is to be given at the party's respective address set forth
below, or such other address as the parties may from time to time designate
by written notice as herein provided.
As addressed to the Fund:
Banyan Strategic Realty Trust
Suite 2900
150 South Wacker Drive
Chicago, Illinois 60606
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attention: Michael J. Choate
As addressed to the Executive:
Leonard G. Levine
Suite 2900
150 South Wacker Drive
Chicago, Illinois 60606
With a copy to:
Saitlin Patzik Frank & Samotny Ltd.
150 S. Wacker Drive
Suite 900
Chicago, Illinois 60606
Attention: Alan B. Patzik
The notice shall be deemed to be received in case (i) on the date of
its actual receipt by the party entitled thereto and in case (ii) on the
date of its mailing.
3
2. APPROVALS.
a. Effectiveness of the Amendment is subject, to the extent
required, to: (i) approval of the Fund's stockholders on or before thirty
days after the Fund's Annual Meeting, including any adjournments or
postponements thereof (the "Final Approval Date"), at which the issuance of
the Award Shares is submitted to a vote of the Fund's Stockholders
("Stockholder Approval"), unless extended by agreement of the parties; and
(ii) approval of the Nasdaq of the inclusion of the Award Shares and the
Final Award Shares in the Nasdaq National Market System ("Nasdaq
Approval"). The Fund shall use its best efforts to promptly obtain
Stockholder Approval and Nasdaq Approval, as well as any other consents or
approvals which may be required. Pending Stockholder Approval and Nasdaq
Approval, the Fund shall issue the Award Shares issuable in respect of the
Additional Compensation for the year ended December 31, 1996 into escrow to
be held for the Executive's benefit pending such approvals. The Executive
shall be entitled to all distributions paid by the Fund in respect of the
shares held in escrow. If Stockholder Approval and NASDAQ Approval is
obtained by the Final Approval Date, the Fund shall release the Additional
Incentive Shares from escrow to the Executive as soon as practicable, but
in no event later than five (5) business days after receipt of the last
approval. These shares may not be transferred by the Executive except in
compliance with federal and state securities law or an exemption therefrom.
These shares shall have the benefit of the Registration Rights Agreement
described in Section 3 hereof.
b. If either Stockholder Approval or Nasdaq Approval is not
obtained by the Final Approval Date then: (i) the amendments contemplated
by SECTION 1 hereof shall be null and void and the terms and conditions of
the Employment Agreement shall remain in full force and effect unless
amended, waived or altered by the parties; (ii) the Additional Incentive
Shares shall be immediately cancelled (the "Cancelled Shares");
(iii) Executive shall be paid, in cash, an amount equal to the Additional
Compensation which had been previously paid through the issuance of the
Cancelled Shares, and thereafter, all Additional Compensation due in
connection with the Agreement shall be paid 20% in the form of Award Shares
and 80% in cash; and (iv) Executive shall be entitled to be paid interest
on the Additional Compensation paid to it pursuant to (iii) above in
respect of the Cancelled Shares at the same rate as dividends are then
being paid in respect of the Fund's shares, with any dividends theretofore
received in respect of the Cancelled Shares credited against the interest
due. For purposes of this paragraph, the rate at which dividends are then
being paid on the Fund's shares shall be deemed to be the percentage which
the dividend payable with respect to the Cancelled Shares bears to the cash
value. For this purpose, cash value shall mean eighty percent (80%) of the
Additional Compensation payable under SECTION 6(c).
c. If the Executive is not employed by the Fund on
January 1, 1998, pursuant to a new Employment Agreement with the Fund
acceptable to Executive, then, notwithstanding the provisions of
SECTION 6(d), as amended, the Executive shall have the option, exercisable
in his sole discretion, to require the Fund to pay the Executive 80% of the
Additional Compensation for the fiscal year ended December 31, 1997 and/or
all of the Additional Compensation due Executive under SECTION 6(c) AND
6(d) in cash no later than the Vesting Date.
4
3. REGISTRATION RIGHTS. Subject to the provisions of
SECTION 6(c), as soon as practicable, the parties shall enter into a
registration rights agreement on usual and customary terms and conditions
granting the Executive the right to cause the Fund to register any or all
of the Award Shares or the Final Award Shares for resale by the Executive.
The Registration Rights Agreement shall generally provide for the
following:
a. Each registration shall be effected by the Fund at its
expense;
b. The Executive shall be entitled to a separate
registration statement with regard to the shares issued under each of (i)
Section 6(c) hereof in 1997 and relating to the Fund's 1996 performance and
(ii) Section 6(c) issued in 1998 and relating to the Fund's 1997
performance and shares issued under Section 6(d);
c. The Executive shall have reasonable piggyback rights; and
d. The Fund shall maintain these registration statements in
effect, and update registration statements as required, to enable Executive
to periodically sell, in his discretion, shares thereunder until such time
as the subject shares are freely saleable pursuant to the provisions of
Rule 144 promulgated under the Securities Act of 1933, as amended.
In the event the parties hereto fail to enter into a mutually
agreeable Registration Rights Agreement by the Final Approval Date,
Executive may, at its option, elect to treat this Amendment as if one of
the approvals required by Section 2(b) hereof had not been received and
effect a termination of this Amendment as set forth therein.
4. AGREEMENTS AS TO PAST CALCULATIONS AND METHODOLOGIES.
a. PREVIOUS CALCULATIONS AND METHODOLOGIES. The parties
hereto agree and acknowledge that each has been represented by competent
professionals and together with these professionals has had an opportunity
to review the formulas set forth in the Employment Agreement for use in
calculating the compensation payable to Executive pursuant to Sections 5
and 6 thereunder, the methodology pursuant to which those formulas have
been applied to calculate the compensation and the amounts determined to be
due to Executive through the date hereof as a result of such formulas and
the applied methodology. In connection therewith, the parties hereto
acknowledge and agree that the formulas set forth in the Agreement for
calculating the compensation, the methodology applied (to date) in
calculating the amounts due pursuant to those formulas and the amounts
calculated to date have been due and payable to Executive through the date
hereof are accurate and each waives any and all rights he or it may have to
recalculate the formulas, modify the methodology applied in the calculation
or alter the amount of the compensation heretofore paid.
b. FUTURE CALCULATIONS AND METHODOLOGIES. The parties
hereto acknowledge and agree that the formulas set forth in the Agreement
for purposes of determining the compensation payable to Executive pursuant
to Sections 5 and 6 of the Employment Agreement and the methodology applied
by the Fund in its prior calculations of the amounts due is appropriate and
the parties hereto further agree and acknowledge that all future
calculations of amounts due Executive for additional compensation pursuant
to Sections 5 and 6 of the Employment Agreement shall be calculated using
the formula set forth therein, applying the methodology utilized in the
past as modified by this Amendment to the Employment Agreement. In
connection therewith, the parties hereto specifically acknowledge the
existence of a memo dated October 17, 1996 from
5
Joel L. Teglia to the Board of Trustees of the Fund and agree
that the methodology and calculations set forth therein are appropriate and
shall be applied, on a consistent basis, in all future calculations of
amounts due as compensation pursuant to the Sections 5 and 6 of the
Employment Agreement.
5. MISCELLANEOUS PROVISIONS.
a. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws (and not the law of
conflicts) of the State of Illinois.
b. Further Assurances. Each party agrees to execute and
deliver such additional instruments and documents and to take all such
other actions as any of the other parties may reasonably request from time
to time in order to effect the provisions, purposes and intent of this
Amendment.
c. ENTIRE AGREEMENT; EFFECT ON OTHER AGREEMENTS. This
Amendment constitutes the entire understanding of the parties with respect
to the amendment of the Employment Agreement and may be modified only in
accordance with the provision of the Employment Agreement governing
amendments. Upon execution of this Amendment, all references in the
Employment Agreement, and any document executed or delivered in connection
therewith, shall be deemed to be references to the Employment Agreement as
amended, supplemented or modified by this Amendment.
d. SEVERABILITY. If any provision of this Amendment shall,
for any reason, be held unenforceable, such provision shall be severed from
this Amendment unless, as a result of such severance, this Amendment fails
to reflect the basic intent of the parties. If this Amendment continues to
reflect the basic intent of the parties, then the invalidity of such
specific provision shall not affect the enforceability of any other
provision herein, and the remaining provisions shall remain in full force
and effect.
e. COUNTERPARTS. This Amendment may be executed in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute
one and the same Amendment.
f. HEADINGS. The descriptive headings of this Amendment are
inserted for convenience only and do not constitute a part of this
Amendment.
g. NO STRICT CONSTRUCTION. This Amendment has been mutually
negotiated and drafted by the parties and no presumption or rule of
contract construction or interpretation by or against a party shall be made
on the basis of the party which might otherwise be charged with drafting
this Amendment.
h. REFERENCES. As used herein, all provisions shall include
the masculine, feminine, neuter, singular and plural thereof, wherever the
context and facts require such construction.
i. RECITALS. The recitals set forth in this Amendment are
incorporated by reference herein and made a part hereof, as if fully
rewritten.
6
IN WITNESS WHEREOF, this Amendment is entered into on the day and year
first written above.
BANYAN STRATEGIC REALTY TRUST
By: /s/ Robert G. Higgins
Name: Robert G. Higgins
Title: Vice President General Counsel
EXECUTIVE:
/s/ Leonard G. Levine
Leonard G. Levine
7