NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is entered into as of
August 5, 1996 between THE CHICAGO DOCK AND CANAL TRUST, an Illinois business
trust (the "Trust"), and DAVID R. TINKHAM (the "Executive").
WHEREAS, the Executive has acquired extensive knowledge of and
experience in the business conducted by the Trust; and
WHEREAS, the Trust and the Executive desire to enter into this
Agreement upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Trust and the Executive hereby agree as follows:
1. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective only upon the termination of the Executive's employment under the
following circumstances:
(a) TERMINATION BY THE EXECUTIVE AFTER CHANGE IN CONTROL. The
Executive may, at his election and upon sixty (60) days prior written
notice to the Trust, terminate his employment under the Employment
Agreement between the Trust and the Executive dated as of April 14,
1993, as amended (the "Employment Agreement"), in the event that
(i) the Executive shall in his absolute judgment determine that due to
changed circumstances occurring on or after the date of this Agreement
he is unable effectively to carry out his duties and responsibilities
as contemplated by the Employment Agreement, and (ii) on or after the
date hereof there has been a "Change in Control." The term "Change in
Control" shall mean (1) a reorganization, merger or consolidation of
the 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 (the "Exchange Act"), and the term "beneficial owner" shall be
interpreted in accordance with Rule 13d-3 under the Exchange 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 the Executive's employment has been
automatically extended for one additional year pursuant to Section 2 of the
Employment Agreement, a majority of the persons serving as Trustees of the
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 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 of the Employment
Agreement shall have expired after the adoption by the Trust of a plan of
liquidation, (y) the Executive shall not have been terminated pursuant to
Section 7(c) of the Employment Agreement and (z) the 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. To be
effective, the Executive's notice to terminate his employment under this
Section 1(a) must be delivered on or before the later of (i) one month
after the December 15 immediately following the Change in Control or
(ii) six (6) months after the Change in Control. In the event of a
termination under this Section 1(a), the parties shall have the obligations
set forth in this Agreement.
(b) TERMINATION WITHOUT CAUSE AFTER CHANGE IN CONTROL. The
Trust may, by action of its Board of Trustees, upon thirty (30) days
advance written notice to the Executive, terminate the employment of
the Executive under the Employment Agreement without Cause. "Cause"
means any act that is materially inimical to the best interests of the
Trust and that constitutes on the part of the Executive common law
fraud, a felony or other gross malfeasance of duty. In the event of
such
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a termination of the Executive's employment under this Section 1(b) upon or
after the occurrence of a Change in Control, the parties shall have the
obligations set forth in this Agreement.
The date of termination of the Executive's employment pursuant to
Section 1(a) or 1(b) above shall be the "Effective Date" of this Agreement. The
term of this Agreement shall commence on the Effective Date and continue for a
period of three years following the Effective Date (the "Noncompetition
Period"); PROVIDED, HOWEVER, that this Agreement shall be null and void and of
no force and effect in the event that the Effective Date has not occurred prior
to the termination of the Employment Agreement in accordance with its terms
(other than pursuant to Sections 7(d) or 7(f) thereof).
2. NONCOMPETITION. During the Noncompetition Period, except with the
prior written approval of the Board of Trustees of the Trust, the Executive will
not, directly or indirectly, as an owner, individual proprietor, principal,
director, partner, officer, employee, consultant, agent, representative or in
any other similar capacity, alone, or in association with any person,
partnership, firm, corporation or other business organization, carry on, be
engaged in or take part in or render services in respect of any activities that
compete with the Identified Trust Business (as hereinafter defined) within a
three (3) mile radius of the northeast corner of the intersection of Columbus
Drive and East Grand Avenue in Chicago, Illinois; PROVIDED, HOWEVER, that
(a) the Executive may own, directly or indirectly, as an investment, securities
of an entity engaged in business in competition with the Identified Trust
Business in any location if the Executive is not a controlling person of, or
member of a group that controls, such entity and the Executive, together with
any group of which the Executive is a member, does not beneficially own in the
aggregate five percent or more of any class of securities of such entity,
(b) the Executive may acquire an entity no more than five percent of the
consolidated revenues of which for each of the three fiscal years of such entity
ended prior to the acquisition thereof by the Executive would fall within the
scope of the prohibition contained in this Section 2 and (c) the Executive may
be employed by an entity engaged in business in competition with the Identified
Trust Business in any location provided the Executive himself does not seek to
obtain on behalf of such entity any development opportunities which the Trust
seeks to add to the Identified Trust Business. The "Identified Trust Business"
means the development of undeveloped real property owned by the Trust and
located in Cityfront Center, Chicago, for purposes of (i) a senior living
housing facility, (ii) a parking facility designed primarily to serve Navy Pier,
or (iii) an expansion of the Sheraton Chicago Hotel & Towers.
3. NON-SOLICITATION. During the Noncompetition Period, except with
the prior written approval of the Board of
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Trustees of the Trust, the Executive shall not, whether for his own account or
for the account of any other individual, partnership, firm, corporation or other
business organization, solicit, request or endeavor to entice away from the
Trust or any of its subsidiaries, any individual, partnership, firm, corporation
or other business organization which is, at the time of such solicitation,
request or endeavor, employed by or otherwise engaged to perform services for
the Trust or any of its subsidiaries (including, but not limited to, any
independent sales representatives or organizations) or any individual,
partnership, firm, corporation or other business organization who is, at the
time of such solicitation, request or endeavor, a customer or client of the
Trust.
4. COMPENSATION. (a) As compensation for the covenants contained in
this Agreement, the Trust shall:
(i) Pay to the Executive a lump sum cash amount equal to
$510,000 within fifteen (15) days of the Effective Date.
(ii) Pay to the Executive in a lump sum within fifteen (15) days
of the Effective Date an amount in cash equal to the present value of
the Executive's additional pension plan benefits accrued through the
third anniversary of the Effective Date (as calculated under the
"Increase in Value" column of Schedule A attached hereto).
(iii) Provide to the 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 Effective Date an amount in
cash equal to 20% of the product of 37,500 and the Fair Market Value
(as defined below) of a common share of the Trust on the date next
preceding the date of the Change in Control (it being understood that
this clause (iii) shall not apply in the event that the Trust has
granted the Liquidation Option (as defined in the Employment
Agreement) to the Executive pursuant to the terms of the Employment
Agreement). "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
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faith exercise of its discretion, shall at such time deem appropriate.
(b) In addition, the Trust agrees that the Board of Trustees will
take such action as is necessary to amend the Executive's existing stock option
agreements to provide, in the event of a Change in Control, for the acceleration
of the payment date (from the last business day of the calendar year to the date
of a Change in Control) for any dividend equivalent payments which shall have
accrued but not yet been distributed prior to the Change in Control.
5. CONFIDENTIALITY. The Executive shall not, at any time during the
Noncompetition Period, make use of or disclose, directly or indirectly, any
trade secret or other confidential or secret information of the Trust related to
the Identified Trust Business and not available to the public or to the
competitors of the Trust ("Confidential Information"), except to the extent that
such Confidential Information (a) becomes a matter of public record or is
published in a newspaper, magazine or other periodical available to the general
public, (b) is required to be disclosed by any law, regulation or order of any
court or regulatory commission, department or agency, or (c) as the Board of
Directors of the Trust may so authorize in writing.
6. SCOPE OF COVENANTS; REMEDIES. The following provisions shall
apply to the covenants of the Executive contained in this Agreement:
(a) Without limiting the right of the Trust to pursue all other
legal and equitable remedies available for violation by the Executive
of the covenants contained in this Agreement, it is expressly agreed
by the Executive and the Trust that such other remedies cannot fully
compensate the Trust for any such violation and that the Trust shall
be entitled to injunctive relief to prevent any such violation or any
continuing violation thereof.
(b) The Trust and the Executive each intends and agrees that the
covenants contained in this Agreement are reasonably designed to
protect the Trust's legitimate business interests without
unnecessarily or unreasonably restricting the Executive's business
opportunities during or after the termination of the Noncompetition
Period, but that if in any action before any court or agency legally
empowered to enforce the covenants contained in this Agreement, any
term, restriction, covenant or promise contained herein is found to be
unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency.
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(c) The maximum aggregate liability of the Executive in respect
of the covenants of the Executive contained in this Agreement shall
not under any circumstances exceed the amount paid pursuant to
Section 4(a) hereof.
7. AUTHORIZATION. The execution, delivery and performance of this
Agreement have been duly authorized by the Trust.
8. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees and by the Trust and its successors and assigns. In the
event of the death of the Executive while any amounts are payable to the
Executive hereunder, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to such person or persons
designated in writing by the Executive to receive such amounts or, if no person
is so designated, to the Executive's estate. As used in this Agreement, the
"Trust" shall mean the Trust as hereinbefore defined and any successor to all or
substantially all of the business and/or assets of the Trust (whether direct or
indirect, by purchase, merger, consolidation or otherwise).
9. NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or five days after deposit in the
United States mail, postage prepaid, addressed (a) if to the Executive, to
David R. Tinkham, 2330 Ewing Avenue, Evanston, Illinois 60201, with a copy to
Diana Shoemaker, 1255 Gulfstream Avenue, Apt. 506, Sarasota, Florida 34236 and
if to the Trust, to The Chicago Dock and Canal Trust, 455 East Illinois Street,
Suite 565, Chicago, Illinois 60611, attention: President, with a copy to
Larry A. Barden, Esq., Sidley & Austin, One First National Plaza, Chicago,
Illinois 60603, or (b) to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
10. GOVERNING LAW; VALIDITY. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois without regard to the
principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any of the other provisions of this Agreement, which other provisions shall
remain in full force and effect.
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11. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
12. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of the Trust. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by the Trust
or the Executive to insist upon strict compliance with any provision of this
Agreement or to assert any right which the Trust or the Executive may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be executed
by a duly authorized officer or director of the Trust and the Executive has
executed this Agreement as of the day and year first above written.
THE CHICAGO DOCK AND CANAL TRUST
By: /s/ Robert E. Wood II
------------------------------
Robert E. Wood II, Trustee
EXECUTIVE
/s/ David R. Tinkham
-----------------------------------
David R. Tinkham
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SCHEDULE A
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(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 594,252 749,584 155,332
Tinkham 135,753 168,332 32,579
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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