AMENDMENT NO. 3 TO
EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment No. 3 to Executive Employment Agreement is made as of
the 5th day of August, 1996 between THE CHICAGO DOCK AND CANAL TRUST, an
Illinois business trust (the "Trust"), and DAVID R. TINKHAM ("Executive").
The Trust and Executive previously entered into an Executive
Employment Agreement dated as of April 14, 1993, an amendment no. 1 thereto
dated as of July 19, 1995 and an amendment no. 2 thereto dated as of April 10,
1996 (as so amended, the "Employment Agreement") providing for the employment
arrangements between the Trust and Executive. The Trust and Executive now
desire to make certain further changes in the Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the Trust and Executive hereby amend the Employment
Agreement as follows:
1. Section 5 of the Employment Agreement shall be amended by
adding a new paragraph (e) to read as follows:
"(e) LIQUIDATION OF THE TRUST. The Trust agrees as
follows: (i) In the event of the adoption of a plan of
liquidation by the Board of Trustees of the Trust, the
Compensation Committee of the Board of Trustees of the Trust
shall concurrently therewith grant to Executive an option (the
"Liquidation Option") to purchase 37,500 common shares at a
purchase price per share equal to the Fair Market Value (as
defined below) of a common share on the date of grant of such
option. The Liquidation Option shall become exercisable upon the
occurrence of a Change in Control (as defined in Section 7(d)).
"Fair Market Value" shall mean the closing price per share of the
common shares quoted on the National Market System of the
National Association of Securities Dealers' Automated Quotation
System on the date as of which such value is being determined,
or, if there shall be no reported transaction for such date, on
the next preceding date for which a transaction was reported;
provided, however, that if Fair Market Value cannot be so
determined, Fair Market Value shall be determined by the
Compensation Committee of the Board of Trustees by whatever means
or method as such Committee, in the good faith exercise of its
discretion, shall at such time deem appropriate.
(ii) In the event of a liquidation (in whole or in part) of
the Trust, the Compensation Committee of the Board of Trustees of
the Trust will, in accordance with its duties to interpret and
administer the stock option plans of the Trust, take such action
as is necessary to provide for an equitable adjustment of the
exercise prices of then outstanding stock options (including the
Liquidation Option) or, if the Board of Trustees determines that
an amendment to such plans is required to effect such an
equitable adjustment, the Board will take such action as is
necessary to implement such amendments."
2. The second sentence of Section 7(d) of the Employment
Agreement shall be deleted in its entirety and the following shall be
substituted in lieu thereof:
"The term "Change in Control" shall mean (1) a
reorganization, merger or consolidation of Trust with one or more
corporations or entities if the Trust is not the surviving
entity, (2) a transfer of all or substantially all of the
property of the Trust to another entity or person, (3) the
transfer in one or more transactions to one or more persons
pursuant to a plan of liquidation or otherwise of (x) the
Specified Percentage (as hereinafter defined) of the total assets
of the Trust and (y) undeveloped real property representing 50%
or more of the aggregate square footage of undeveloped real
property owned by the Trust immediately prior to the first
transaction involving a transfer of assets after the date hereof
(the "Measurement Date"), (4) if any person becomes the
beneficial owner of twenty-five percent (25%) or more of the
total number of outstanding common shares of the Trust (as used
in this clause, "person" shall mean any individual or entity as
well as any syndicate or group deemed to be a person pursuant to
Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended, and the term "beneficial owner" shall be interpreted in
accordance with Rule 13d-3 under such Act, or any corresponding
rule later adopted), or (5) if subsequent to the date (herein the
"Determination Date") which is the later of the date hereof or
the last date as of which the term of Executive's employment has
been automatically extended for one additional year pursuant to
Section 2 hereof, a majority of the persons serving as Trustees
of the
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Trust shall be persons who were not Trustees as of the Determination
Date. "Specified Percentage" shall mean a percentage equal to or
greater than 70% which is derived from a fraction, the numerator of
which is the aggregate net proceeds to the Trust from the sale or
sales of assets sold since the Measurement Date (net of any related
indebtedness) and the denominator of which is the dollar amount
reflected on the Trust's balance sheet as total assets at the end of
the fiscal year next preceding the Measurement Date (net of any
indebtedness). Notwithstanding anything contained herein to the
contrary, it is understood that a Change in Control shall be deemed to
have occurred for purposes of this Agreement under the following
circumstances: (x) the term set forth in Section 2 hereof shall have
expired after the adoption by the Trust of a plan of liquidation,
(y) Executive shall not have been terminated pursuant to Section 7(c)
hereof and (z) Executive shall not have refused to accept an extension
to his employment on substantially the same terms and conditions which
would have enabled him to remain employed by the Trust until the
Specified Percentage had been achieved."
3. Section 8(d) of the Employment Agreement shall be deleted in
its entirety and the following shall be substituted in lieu thereof:
"(d) (i) If Executive's employment is terminated under
Section 7(d) or Section 7(f) above prior to the expiration of the
term of this Agreement, the Trust, in lieu of all other
obligations under this Agreement (other than the obligations set
forth in clause (ii) below), shall as liquidated damages or
severance pay or both cause all then outstanding stock options
theretofore granted to Executive to immediately vest and to
become exercisable regardless of any installment exercise
provisions.
(ii) If Executive's employment is terminated under
Section 7(f) above prior to a Change in Control and prior to the
expiration of the term of this Agreement, the Trust, in addition
to the obligations set forth in clause (i) above, shall as
liquidated damages or severance pay or both:
(a) pay Executive his base compensation for thirty-six
(36)
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months thereafter at the then current rate as provided in
Section 5(a) hereof; provided that such base compensation shall
be paid entirely in cash except to the extent of the agreed
compensation value of Base Compensation Options granted to
Executive prior to the date of Notice of Termination (or the Date
of Termination with respect to any termination for which a Notice
of Termination is not required) as base compensation for any
period after the Date of Termination;
(b) during the thirty-six (36) month period
thereafter, (at the Trust's expense) provide Executive with
the benefits described in Schedule A hereto;
(c) pay to Executive in a lump sum within fifteen (15)
days of the Date of Termination an amount in cash equal to
the present value of Executive's additional pension plan
benefits under the Trust's defined benefit plans accrued
through the third anniversary of the Date of Termination (as
calculated under the "Increase in Value" column of
Schedule B attached hereto); and
(d) provide to Executive, pursuant to a plan
previously approved by the Compensation Committee of the
Board of Trustees, in a lump sum within fifteen (15) days of
the Date of Termination an amount in cash equal to 20% of
the product of 37,500 and the Fair Market Value of a common
share of the Trust on the Date of Termination (it being
understood that this clause (d) shall not apply in the event
that the Trust has granted the Liquidation Option to
Executive)."
4. As amended hereby, the Employment Agreement remains in full
force and effect.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
THE CHICAGO DOCK AND CANAL TRUST
By: /s/ Robert E. Wood II
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Robert E. Wood II, Trustee
EXECUTIVE
/s/ David R. Tinkham
----------------------------------------
David R. Tinkham
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SCHEDULE A
LIFE INSURANCE
$50,000 GROUP TERM COVERAGE
HEALTH/DENTAL INS
85% OF COST OF $200 DEDUCTIBLE EMPLOYEE HEALTH INSURANCE
35% OF COST OF $200 DEDUCTIBLE DEPENDENT HEALTH INSURANCE
85% OF COST OF EMPLOYEE DENTAL POLICY
35% OF COST OF DEPENDENT DENTAL POLICY
DISABILITY INSURANCE
INDIVIDUAL POLICY FOR $1,250 BENEFIT PER MONTH
GROUP POLICY FOR $6,000 BENEFIT PER MONTH
EMPLOYEE TO REPORT COST IN INCOME; BENEFITS TAX FREE
AUTOMOBILE
USE OF VOLVO 850 GLT, MAINTENANCE, GAS, INSURANCE
NEW CAR EVERY TWO YEARS
401(k) PLAN
ANNUAL TRUST CONTRIBUTION OF $5,000 PER YEAR
CLUB DUES
UNIVERSITY CLUB OF CHICAGO
410 CLUB
ECONOMIC CLUB
EXECUTIVE'S CLUB
CITYFRONT PLACE HEALTH CLUB
PARKING
MONTHLY INDOOR PARKING PASS
SCHEDULE B
(TOWERS PERRIN Letterhead)
CONFIDENTIAL
July 16, 1996
Mr. David R. Tinkham
Vice President
The Chicago Dock & Canal Trust
455 East Illinois Street, Suite 565
Chicago, Illinois 60611
Dear David:
Following up to our prior estimates of the value of the retirement-related
provisions of your and Charlie Gardner's employment contracts in the event of
your involuntary terminations prior to the expiration of the contracts, we have
estimated those values at additional periodic dates after September 30, 1996.
Below are the additional estimates (total of qualified plan and SERP) together
with the September 30, 1996 estimate:
______________________________________________________________________________
Value Value With 3
Without 3 Added Years
Termination Date Added Years of Accruals Increase in
of Accruals Value
______________________________________________________________________________
September 30, 1996
Gardner $499,331 $690,962 $191,631
Tinkham 98,393 $154,261 55,868
______________________________________________________________________________
December 31, 1996
Gardner 559,545 710,240 150,695
Tinkham 127,004 158,574 31,570
______________________________________________________________________________
March 31, 1997
Gardner 576,773 729,780 153,007
Tinkham 131,321 163,381 32,060
______________________________________________________________________________
June 30, 1997
Gardner 594,252 749,780 155,332
Tinkham 135,753 168,332 32,579
______________________________________________________________________________
As you can see, there is a discontinuity in the value of the contract provisions
(increase in value) at December 31, 1996. That's because the SERP final pay is
based on the highest Plan Year pay in the last five FULL Plan Years. Since the
Plan Year is the calendar year, 1996 pay is not taken into account in
calculating the benefit at September 30, 1996. The total benefit calculated
taking into account three future years already uses 1996 in the calculation; we
don't see the same discontinuity in that benefit. In other words, there is a
discontinuity in the value of the contract benefit but the total benefits
(qualified plan, SERP, and contract provisions) increases rather smoothly.
Again, keep in mind that the value of these benefits will change if:
- - the actuarial assumptions, in particular the interest rates, change or
- - any of the participant information changes.
Attached are tables showing most of the development of the additional estimates.
If you have any questions or need additional information, please call me.
Sincerely,
/s/ William G. Leighty, Jr.
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William G. Leighty, Jr., Principal
WGL:kr
Enclosures