Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 12, 2023, Highlands REIT, Inc. (the "Company") entered into amended and
restated executive employment agreements with Richard Vance, President and Chief
Executive Officer of the Company (the "Vance Amended and Restated Employment
Agreement") and Robert J. Lange, Executive Vice President, Chief Operating
Officer, General Counsel and Secretary (the "Lange Amended and Restated
Employment Agreement"). The Company also entered into an executive employment
agreement with Kimberly Karas, Senior Vice President, Chief Accounting Officer
and Treasurer (the "Karas Employment Agreement", and together with the Vance
Amended and Restated Employment Agreement and the Lange Amended and Restated
Employment Agreement, the "Employment Agreements"). The Karas Employment
Agreement supersedes that certain offer letter dated June 6, 2019 by and between
the Company and Ms. Karas and that certain Change in Control Severance Agreement
dated July 8, 2019 by and between the Company and Ms. Karas.
The Employment Agreements set forth annual base salary rates for Messrs. Vance
and Lange and Ms. Karas (each, an "Executive" and collectively, the
"Executives"), which are $750,000, $600,000 and $350,000 respectively. Messrs.
Vance and Lange and Ms. Karas are each eligible to receive an annual cash
performance bonus based upon the achievement of performance criteria established
by the Company's board of directors or the compensation committee of the board
of directors. The target annual bonus for each of Messrs. Vance and Lange and
Ms. Karas will be no less than 100%, 100% and 40% of the applicable Executive's
base salary, respectively, with threshold and maximum bonus levels to be
determined on an annual basis. In the event of a "change in control" (as defined
in the Employment Agreements) during their employment period, the Executives
will be entitled to receive an annual bonus equal to the greater of the
applicable Executive's (x) annual bonus, if any, for the completed fiscal year
immediately preceding the fiscal year in which a change in control occurs
("Prior Bonus") or (y) target bonus for the year in which the change in control
occurs, in each case, pro-rated for the portion of the fiscal year that elapsed
before the change in control.
Pursuant to the Vance Amended and Restated Employment Agreement and the Lange
Amended and Restated Employment Agreement, if either Mr. Vance's or Mr. Lange's
employment is terminated by the Company without "cause" or by him for "good
reason" (each, as defined in the applicable Employment Agreement), then, upon
such termination, subject to the applicable Executive's execution and
non-revocation of a release of claims, Mr. Vance or Mr. Lange (as applicable)
will be entitled to a lump-sum payment in an amount equal to one and a half
times the sum of his annual base salary and target annual bonus (or, if in
connection with a change in control of the Company, three times the sum of his
annual base salary and the greater of the Executive's (x) Prior Bonus or (y)
target bonus for the year in which the change in control termination occurs) and
payment or reimbursement by the Company of premiums for healthcare continuation
coverage under COBRA for him and his dependents for up to 18 months after the
termination date.
Pursuant to the Karas Employment Agreement, if Ms. Karas' employment is
terminated by the Company without "cause" or by her for "good reason" (each, as
defined in the Karas Employment Agreement), then, upon such termination, subject
to Ms. Karas' execution and non-revocation of a release of claims, Ms. Karas
will be entitled to a lump-sum payment in an amount equal to one and one quarter
times the sum of her annual base salary and target annual bonus (or, if in
connection with a change in control of the Company, two and one half times the
sum of her annual base salary and the greater of her (x) Prior Bonus or (y)
target bonus for the year in which the change in control termination occurs) and
payment or reimbursement by the Company of premiums for healthcare continuation
coverage under COBRA for her and her dependents for up to 18 months after the
termination date.
The Employment Agreements further provide that, to the extent any payment or
benefit received by the applicable Executive in connection with a change in
control would be subject to an excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended, such payments and/or benefits will be subject
to a "best pay cap" reduction if such reduction would result in a greater net
after-tax benefit to the Executive than receiving the full amount of such
payments.
The Employment Agreements also contain a confidentiality covenant by each
Executive that extends indefinitely and an employee and independent contractor
nonsolicitation covenant that extends during each Executive's employment and for
a period of one year following the Executive's termination. The Employment
Agreements also include a mutual non-disparagement covenant between each
Executive and the Company. The Employment Agreements further clarify that in
compliance with applicable law, the Executives may disclose trade secrets of the
Company or its affiliates without being held criminally or civilly liable under
federal or state trade secret laws, provided that the disclosure (i) is made (A)
in confidence to a federal, state or local government official, either directly
or indirectly, or to the applicable Executive's attorney and (B) solely for the
purpose of reporting or investigating a suspected violation of law; or (ii) is
made in a complaint or other document that is filed under seal in a lawsuit or
other proceeding. Furthermore, the Employment Agreements provide that nothing in
the Employment Agreements or in any other agreement the Executives have with the
Company or its affiliates will restrict the Executives from disclosing
information concerning possible violations of law or seeking a whistleblower
award.
--------------------------------------------------------------------------------
The foregoing descriptions of the Vance Amended and Restated Employment
Agreement, the Lange Amended and Restated Employment Agreement and the Karas
Employment Agreement are qualified in their entirety by reference to their
terms, which agreements are filed as Exhibit 10.1, 10.2 and 10.3, respectively,
to this Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number Description
Amended and Restated Executive Employment Agreement, dated April 12, 2023, by
10.1 and between Highlands REIT, Inc. and Richard Vance
Amended and Restated Executive Employment Agreement, dated April 12, 2023, by
10.2 and between Highlands REIT, Inc. and Robert J. Lange
Executive Employment Agreement, dated April 12, 2023, by and between Highlands
10.3 REIT, Inc. and Kimberly Karas
2
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses