Exhibit 10.1
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT
(as amended from time to time, the
“Agreement”) dated as of February 2, 2007, by and
between Wells Real Estate Investment Trust, Inc. , with its
principal place of business at 6200 The Corners Parkway, Norcross,
Georgia 30092 (the “Company”) and
Donald A. Miller , residing at the address set
forth on the signature page hereof (the
“Executive”).
WHEREAS , the Company wishes to employ the Executive and
the Executive wishes to accept such offer, on the terms set forth
below.
Accordingly, the parties hereto
agree as follows:
1. Term
. The Company hereby employs the
Executive, and the Executive hereby accepts such employment, for an
initial term commencing as of the date of the execution of the
Merger Agreement by the Company, certain wholly-owned subsidiaries
of the Company, Wells Real Estate Funds, Inc., Wells Capital, Inc.,
Wells Management Company, Inc., Wells Government Services, Inc.,
Wells Advisory Services I, LLC and Wells Real Estate Advisory
Services, Inc., as it may be amended, superseded or replaced from
time to time (the “Merger Agreement”) and continuing
for a period ending on December 31, 2009, unless sooner
terminated in accordance with the provisions of Section 4 (the
period during which the Executive is employed pursuant to this
Agreement being hereinafter referred to as the “Term”).
Following December 31, 2009, the Term shall automatically be
extended for successive one-year periods in accordance with the
terms of this Agreement (subject to termination as aforesaid)
unless either party notifies the other party of non-renewal in
writing, in accordance with Section 6.4, at least ninety
(90) days prior to the expiration of the initial Term or any
subsequent renewal period. The delivery by the Company to Executive
of written notice indicating that it intends not to extend the Term
as provided in this Section 1 prior to the expiration of the
then operative Term shall not be deemed a termination of
Executive’s employment by the Company without Cause for
purposes of this Agreement. If the Term expires, and Executive and
Company agree that Executive will remain employed by the Company,
but do not enter into a new employment agreement, then such
employment shall be “at-will” and this Agreement will
be of no further force and effect other than with respect to the
provisions of this Agreement that are expressly intended to survive
the expiration of the Term.
2. Duties
. During the Term, the Executive
shall be employed by the Company as Chief Executive Officer of the
Company, and, as such, the Executive shall faithfully perform for
the Company the duties of such office and shall perform such other
duties of an executive, managerial or administrative nature, which
are consistent with such office, as shall be specified and
designated from time to time by the Board of Directors of the
Company (the “Board”), including also serving as
President of the Company and as an officer, manager, agent, trustee
or other representative with respect to any subsidiary, affiliate
or joint venture of the Company (each a “Subsidiary”).
Subject to the discretion of the Nominating and Corporate
Governance
Committee of the Board and the vote of the
Stockholders, Executive shall serve as a member of the Board and of
the board of directors (or equivalent) of any Subsidiary without
additional compensation. The Executive shall devote substantially
all of his business time and effort to the performance of his
duties hereunder. Notwithstanding the foregoing, nothing herein
shall prohibit Executive from (i) engaging in personal
investment activities for the Executive and his family that do not
give rise to any conflict of interests with the Company or its
affiliates, (ii) subject to prior approval of the Board,
accepting directorships unrelated to the Company that do not give
rise to any conflict of interests with the Company or its
affiliates and (iii) engaging in charitable and civic
activities, so long as such activities and outside interests
described in clauses (i), (ii) and (iii) hereof do not
interfere, in any material respect, with the performance of the
Executive’s duties hereunder. The Executive shall be based in
the Atlanta, Georgia metropolitan area.
3. Compensation
.
3.1 Salary . The Company
shall pay the Executive during the Term an initial base salary at
the rate of Six Hundred Thousand Dollars ($600,000) per annum (the
“Base Salary”), in accordance with the customary
payroll practices of the Company applicable to senior executives.
The Compensation Committee of the Board (the “Compensation
Committee”) may provide for such increases in Base Salary as
it may in its discretion deem appropriate; provided that in no
event shall the Base Salary be decreased during the Term without
the written consent of Executive.
3.2 Bonus . For fiscal year
2007, in addition to the Base Salary, Executive shall be entitled
to (i) a Two Hundred Thousand Dollar ($200,000) initial bonus
payable within fifteen (15) days of the date of this Agreement
and (ii) shall be eligible to earn an annual target cash bonus
of an additional Four Hundred Thousand Dollars ($400,000) based
upon criteria agreed to by the Compensation Committee and Executive
as of the date hereof, which bonus shall be payable pursuant to the
OIP (as defined below) within a reasonable time following the end
of the fiscal year, but no later than the Outside Payment Date (as
defined below). During the Term, in addition to the Base Salary,
for each fiscal year (after fiscal year 2007) of the Company ending
during the Term, the Executive shall be eligible to earn an annual
target cash bonus of 50% (after meeting threshold performance
criteria), 100% (after meeting target performance criteria) and up
to 175% (after meeting maximum performance criteria) the
Executive’s Base Salary (the “Target Bonus
Amount”) payable during such fiscal year based upon criteria
to be reasonably established not later than the first thirty
(30) days of that fiscal year by the Compensation Committee in
consultation with Executive (the “Annual Bonus”), which
bonus shall be pursuant to the OIP. The Annual Bonus actually
earned for any fiscal year shall be determined by the Compensation
Committee in good faith and paid to Executive within a reasonable
time after the end of the fiscal year, but in no event later than
thirty (30) days (the “Outside Payment Date”)
following completion of the Company’s financial statement
audit for the applicable fiscal year, which the Company shall
endeavor in good faith to complete within three months of the last
day of the applicable fiscal year. Notwithstanding the foregoing,
if the Outside Payment Date is later than 120 days after the end of
the fiscal year, the Company will pay the portion of
Executive’s bonus that the Compensation Committee is able to
determine that Executive is entitled to (if any) no later than the
120 days after the end of the fiscal year and the remaining
portion, if any, of Executive’s Annual Bonus shall be paid no
later than the Outside Payment Date.
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3.3 Incentive Award . During
the Term, in addition to the Base Salary and Annual Bonus, the
Executive shall be eligible to participate in the Company’s
2007 Omnibus Incentive Plan (if such plan is approved by the
Stockholders) or other incentive plan as in effect from time to
time (as such plan is approved by the Stockholders) (the
“OIP”), and awards which may be granted to Executive
thereunder shall vest on a basis specified by the Compensation
Committee and may be subject to the achievement of pre-established
performance-related goals determined by the Compensation Committee,
and otherwise shall be subject to such plan and definitive
documentation governing the award. Grants during the Term under the
OIP shall be made at such times and in such amounts as the
Compensation Committee shall determine in its
discretion.
3.4 Employee Benefits .
Except with respect to benefits specifically provided for otherwise
in this Agreement, the Executive shall be entitled during the Term
to participate in any group life, hospitalization or disability
insurance plans, health programs, retirement plans, fringe benefit
programs and similar benefits that are available to other senior
executives of the Company generally, on the same terms as such
other executives, in each case to the extent that the Executive is
eligible under the terms of such plans or programs.
3.5 Vacation . The Executive
shall be entitled to twenty (20) vacation days per fiscal
year, which number shall be pro-rated in the case of any partial
fiscal year during the Term and which vacation days shall otherwise
be taken consistent with the Company’s vacation policies.
Vacation and other paid time-off (PTO) shall be taken and provided
in accordance with the Company’s vacation and PTO policies
and plans.
3.6 Expenses . During the
Agreement Term, the Company shall reimburse Executive for all
reasonable business expenses incurred by Executive in the
performance of Executive’s duties hereunder in accordance
with the Company’s policies as in effect from time to
time.
3.7 Forfeiture . If the
Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct,
with any financial reporting requirement under the securities laws,
Executive shall reimburse the Company to the extent required by
Section 304 of the Sarbanes-Oxley Act of 2002 for any bonus or
other incentive-based or equity-based compensation received by
Executive from the Company during the 12-month period following the
first public issuance or filing with the Securities and Exchange
Commission (whichever occurs first) of the financial document
embodying such financial reporting requirement and shall reimburse
the Company for any profits realized from the sale of securities of
the Company during that 12-month period.
4. Termination
. Notwithstanding any other
provision of this Agreement, the provisions of this Section 4
shall exclusively govern Executive’s rights (except as
otherwise expressly set forth herein) upon termination of
employment with the Company. Following Executive’s
termination of employment, except as set forth in this
Section 4, Executive (and Executive’s legal
representative and estate) shall have no further rights to any
compensation or any other benefits under this Agreement.
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4.1 Definitions .
(a) “ Accrued Rights
” means the sum of the following: (i) any accrued but
unpaid Base Salary through the date of termination; (ii) a
payment in respect of all unpaid, but accrued and unused
vacation/PTO through the date of termination; (iii) any Annual
Bonus earned but unpaid as of the date of termination for any
previously completed fiscal year (i.e., not for the year of
employment termination); (iv) reimbursement for any
unreimbursed business expenses properly incurred by Executive in
accordance with Company policy through the date of termination; and
(v) such rights, if any, under any award granted to Executive
pursuant to the OIP and other compensation programs and employee
benefits to which Executive may be entitled upon termination of
employment according to the documents governing such
benefits.
(b) “ Cause ”
means any of the following: (i) any material act or material
omission by Executive which constitutes intentional misconduct in
connection with the Company’s or any Subsidiary’s
business or relating to Executive’s duties hereunder or a
willful violation of law in connection with the Company’s or
any Subsidiary’s business or relating to Executive’s
duties hereunder; (ii) an act of fraud, conversion,
misappropriation or embezzlement by Executive with respect to the
Company’s or any Subsidiary’s assets or business or
assets in the possession or control of the Company or any
Subsidiary or conviction of, indictment for (or its procedural
equivalent) or entering a guilty plea or plea of no contest with
respect to a felony, the equivalent thereof or any crime involving
any moral turpitude with respect to which imprisonment is a common
punishment; (iii) any act of dishonesty committed by Executive
in connection with the Company’s or any Subsidiary’s
business or relating to Executive’s duties hereunder;
(iv) the willful neglect of material duties of Executive or
gross misconduct by Executive; (v) the use of illegal drugs or
excessive use of alcohol to the extent that any of such uses, in
the Board’s good faith determination, materially interferes
with the performance of Executive’s duties to the Company or
any Subsidiary; (vi) any other failure (other than any failure
resulting from incapacity due to physical or mental illness) by
Executive to perform his material and reasonable duties and
responsibilities as an employee, director or consultant of the
Company or any Subsidiary; or (vii) any breach of the
provisions of Section 5; any of which continues without cure,
if curable, reasonably satisfactory to the Board within ten
(10) days following written notice from the Company or any
Subsidiary (except in the case of a willful failure to perform his
duties or a willful breach, which shall require no notice or allow
no such cure right). For purposes of the foregoing sentence, no
act, or failure to act, on Executive’s part shall be
considered “willful” unless the Executive acted, or
failed to act, in bad faith or without reasonable belief that his
act or failure to act was in the best interest of the Company or
any Subsidiary.
(c) “ Change of Control
” shall be deemed to have occurred if:
(i) any “person,”
including a “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities and Exchange Act of 1934 (the
“Exchange Act”), but excluding the Company, any entity
controlling, controlled by or under common control with the
Company, any trustee, fiduciary or other person or entity holding
securities under any
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employee benefit plan or trust of the Company or
any such entity, and the Executive and any “group” (as
such term is used in Section 13(d)(3) of the Exchange Act) of
which the Executive is a member), is or becomes the
“beneficial owner” (as defined in Rule 13(d)(3) under
the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding
voting securities; or
(ii) any consolidation or merger of
the Company where the shareholders of the Company, immediately
prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, shares representing in the aggregate 50% or more of the
combined voting power of the voting securities of the corporation
issuing cash or securities in the consolidation or merger (or of
its ultimate parent corporation, if any); or
(iii) there shall occur (A) any
sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of the
Company, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at
least 50% of the combined voting power of the voting securities of
which are owned by “persons” (as defined above) in
substantially the same proportion as their ownership of the Company
immediately prior to such sale or (B) the approval by
shareholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company; or
(iv) the members of the Board at the
beginning of the Term (the “Incumbent Directors”) cease
for any reason other than due to death to constitute at least a
majority of the members of the Board; provided that any director
whose election, or nomination for election by the Company’s
shareholders, was approved or ratified by a vote of at least a
majority of the members of the Board then still in office who were
then Incumbent Directors, shall be deemed to be an Incumbent
Director.
Notwithstanding the foregoing, in no
event will a “Change in Control” be deemed to have
occurred by virtue of the closing of the transactions contemplated
by the Merger Agreement.
(d) “ Disability
” means physical or mental incapacity whereby Executive is
unable with or without reasonable accommodation for a period of six
(6) consecutive months or for an aggregate of nine
(9) months in any twenty-four (24) consecutive month
period to perform the essential functions of Executive’s
duties.
(e) “ Good Reason
” shall be present where Executive gives notice to the Board
of his voluntary resignation (unless the following occur with
Executive’s written consent specifically referring to this
Section 4) following either: (i) the failure of the
Company to pay or cause to be paid Executive’s Base Salary or
Annual Bonus when due hereunder; (ii) a material diminution in
Executive’s status, including, title, position, duties,
authority or responsibility; (iii) a material adverse change
in the criteria to be applied by the Company with respect to
Executive’s Target Annual Bonus for fiscal year 2009 and
subsequent fiscal years as compared to the prior fiscal year
(unless Executive has consented to such criteria) or the
failure
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of the Company to adopt performance criteria
reasonably acceptable to Executive with respect to fiscal year
2008; (iv) the failure of the Board (or its Nominating and
Corporate Governance Committee) to nominate Executive to the Board;
(v) the relocation of the Company’s executive offices to
a location outside of the Atlanta, Georgia metropolitan area
without the consent of Executive; (vi) the failure to provide
Executive with awards under the OIP that are reasonably and
generally comparable to awards granted to other executive officers
of the Company under the OIP (after taking into account all awards
granted to Executive and such other executives under the OIP)
(unless Executive has consented to the awards or has recommended to
the Compensation Committee that another executive officer receive a
disproportionate award) or the failure of the Company’s Board
of Directors or Stockholders (if required) to approve the OIP or
another equity-based incentive plan provided such other plan is
reasonably acceptable to Executive); or (vii) the occurrence
of a Change of Control. Notwithstanding the foregoing,
(1) Good Reason (A) shall not be deemed to exist unless
the Executive gives to the Company a written notice identifying the
event or condition purportedly giving rise to Good Reason expressly
referencing this Section 4.1(e) within 90 days after the time
at which Executive first becomes aware of the event or condition
and (B) shall not be deemed to exist at any time after the
Board has determined that there exists an event or condition which
could serve as the basis of a termination of the Executive’s
employment for Cause so long as the Board gives notice to Executive
of such determination within thirty (30) days of such
determination and such notice is given within 120 days after the
time at which the Board first becomes aware of the the event or
conditions constituting Cause; and (2) if there exists
(without regard to the following clause (2)(A)) an event or
condition that constitutes Good Reason (other than pursuant to
Section 4(e)(iv) following a Change in Control), the Company
shall have 30 days from the date notice of Good Reason is given to
cure such event or condition and, if the Company does so, such
event or condition shall not constitute Good Reason hereunder; and
if the Company does not cure such event or condition within such
30-day period, the Executive shall have ten (10) business days
thereafter to give the Company notice of termination of employment
on account thereof (specifying a termination date no later than ten
(10) days from the date of such notice of
termination).
4.2 Termination by the Company
for Cause or by Executive’s Resignation without Good
Reason . The Term and Executive’s employment hereunder
may be terminated by the Company for Cause and shall terminate upon
Executive’s resignation without Good Reason, and in either
case Executive shall be entitled to receive only his Accrued
Rights.
4.3 Death/Disability . The
Term and Executive’s employment hereunder shall terminate
upon Executive’s death or Disability. Upon termination of
Executive’s employment hereunder due to death or Disability,
Executive or Executive’s legal representative or estate (as
the case may be) shall be entitled to receive (i) the Accrued
Rights, plus (ii) an amount equal to a pro-rated portion of
the Annual Bonus Executive otherwise would have been paid for the
fiscal year in which such termination of employment occurs, payable
when the Annual Bonus would otherwise have been paid to Executive
pursuant to Section 3.2, based upon (a) actual
performance for such fiscal year, as determined at the end of such
fiscal year and (b) the percentage of such fiscal year that
shall have elapsed through the date of Executive’s
termination of employment, plus (iii) provided that Executive
or Executive’s legal representative or estate (as the case
may be) first executes and returns to the Company (and does not
revoke within any applicable waiting period relevant thereto) a
release of all claims arising out of or relating to this
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Agreement or Executive’s employment by the
Company or any Subsidiary (other than any claims for
indemnification to which Executive may be entitled as a result of
his serving as an officer or director of the Company or any
Subsidiary) that is in form and substance reasonably satisfactory
to the Company:
(a) an amount, payable in a lump sum
without discount within 30 days of the date of termination as the
result of Executive’s death or Disability (subject to
Section 6.6), equal to two (2) times the sum of
Executive’s (i) annual Base Salary at the time of
termination and (ii) the average Annual Bonus actually earned
and paid for the last three full calendar years ending prior to the
termination date. In the event that there are less than three full
calendar years of the Term completed on the date of termination,
the average shall be based on the average Annual Bonus actually
earned and paid (or payable) during the Term through the date of
termination.
(b) continued medical benefits for
Executive, Executive’s spouse and Executive’s eligible
dependents, who at the time of Executive’s termination are
enrolled in the Company’s benefits plans provided for a
period of twelve (12) months following Executive’s
termination of employment. Such benefits shall be substantially
identical to the benefits maintained for other senior executives of
the Company, and shall be contingent upon Executive’s
eligible dependents continuing to fund any applicable
“employee portion” of any premiums or other co-pay or
employee-funded amounts. Executive acknowledges that such benefit
continuation is intended, and shall be deemed, to satisfy the
obligations of the Company and any of its subsidiaries and
affiliates to provide continuation of benefits under COBRA for such
period and that the Company may satisfy such obligation by paying
any applicable COBRA premiums or causing such premiums to be paid.
Executive’s entitlement to benefits
