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Exhibit 10.19
EMPLOYMENT CONTRACT
EXCEL LEGACY CORPORATION
A Delaware Corporation
THIS EMPLOYMENT CONTRACT, is executed on May 1, 1998, by and between,
EXCEL LEGACY CORPORATION, a Delaware corporation (the "Company"), and XXXXX X.
XXXX ("Employee").
1. EMPLOYMENT
The Company hereby employs Employee and Employee hereby accepts
employment upon the terms and conditions hereinafter set forth.
2. TERM AND RENEWAL
2.1 Term. The term of this Contract shall be deemed to have commenced on
May 1, 1998 (the "Effective Date"); and shall continue for three (3) years from
the Effective Date on the terms and conditions set forth herein, unless sooner
terminated as hereinafter provided in Article 5 below.
2.2 Automatic Extension. Following the initial 3-year term of
employment, this Contract shall be automatically renewed for an additional
12-month period, effective on the expiration of the initial 3-year term, in
accordance with this section. In the event either the Company or Employee does
not give notice to the other party of its election to terminate this Contract at
least six months prior to the date of termination of the initial 3-year term,
this Contract shall be automatically renewed for an additional 12-month term.
3. COMPENSATION
3.1 Base Compensation. For the services to be rendered by Employee under
this Contract, Employee shall be entitled to receive, commencing as of May 1,
1998, an initial annual base compensation of $150,000, payable monthly. This
base compensation shall be reviewed and adjusted annually as determined by the
compensation committee of the Board of Directors, but in no event will the
annual base compensation be less than the initial amount set forth above.
3.2 Options. The Company shall, as of April 20, 1998, issue to Employee
Incentive Stock Options (the "Executive Options") to purchase 150,000 shares of
the Company's no par value common stock at an exercise price of $5.00 per share
or the closing price of the stock on April 20, 1998, whichever is greater.
Employee shall also be issued an option of 150,000 shares at an exercise price
of $10.00 per share. The options shall vest over five (5) years at twenty
percent (20%) per year. The Executive Options for the purchase of 20% of said
shares shall be exercisable on the first anniversary date of the Effective Date.
The Executive Options shall terminate on the ninth anniversary date of the first
date on which they may first be exercised.
3.3 Automobile. Commencing on May 1, 1998 and continuing during the term
of this Agreement, the Company shall pay Employee an automobile allowance of
$500 per month. Employee may apply such payments in such manner as he, in his
sole discretion, may determine.
3.4 Insurance Benefits.
(a) The Company shall provide to Employee, his wife and children,
at its sole cost, such health, dental and optical insurance as the Company may
from time to time make available to its other executive employees. The Company
shall also continue annual payments on Employee's life insurance up to $4,160
until such time as the life insurance policy self-funds.
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(b) The Company shall provide Employee such disability insurance as
the Company in its sole discretion may from time to time make available to its
other executive employees.
3.5 Bonus Compensation. At least annually, the Company's compensation
committee of the Board of Directors (the "Board") shall review Employee's
performance and may elect, in its sole and absolute discretion, the granting of
a cash bonus which the Board shall reasonably determine as fairly compensating
and awarding Employee for his service to the Company and/or as incentive
compensation for continued service to the Company. The amount of such cash bonus
is dependent on the achievement of certain performance levels of the Company,
including per share growth in funds from operations and cash flow. Additionally,
the Board shall consider the performance of other companies of similar size and
conducting similar businesses to that of the Company, levels of compensation
paid by such similar companies to their employees having comparable duties and
responsibilities to those of Employee and such other factors as the Board may
reasonably determine. The amount of such bonus shall be limited to 100% of
Employees base salary for the year awarded.
3.6 Method of Payment. The monetary compensation payable to Employee
hereunder may be paid in whole or in part, from time to time, by the Company
and/or its subsidiaries and/or its Affiliates, but shall at all times remain the
responsibility of the Company.
3.7 401(k) Plan. Employee shall be entitled to participate in a 401(k)
program. However, at the discretion of the Company, Employee shall be entitled
to continue with TenantFirst's 401(k) plan or participate in the Company's
401(k) Plan in the same manner as the Company's other senior executives.
4. DUTIES
4.1 Service. Employee shall serve as Executive Vice
President/Development of the Company. Employee shall also serve as President and
Chief Executive Officer of TenantFirst Real Estate Services, Inc. Employee shall
have authority, subject to confirmation and approval of the Executive Committee,
to execute contracts or otherwise bind the Company in any transaction, and
authorize, initiate and execute wire transfers of funds to facilitate any and
all acquisitions or dispositions of property or any other activities related
thereto. Employee shall serve as a director to the Company and/or such of its
Subsidiaries. Employee may, at his discretion and upon request of the Company,
serve the Company in other offices and capacities in addition to the foregoing,
but shall not be required to do so. In the event the Company and Employee
voluntarily agree that Employee shall terminate his service in any one or more
of the aforementioned capacities, or Employee's service in one or more of the
aforementioned capacities is terminated, Employee's compensation, as specified
in this Contract, shall not be diminished or reduced in any manner.
Any change of Employee's status as an officer of the Company as herein
provided or any material decrease in Employee's authority or responsibilities
hereunder, without Employee's written consent shall, at Employee's election,
constitute a material breach of this Contract and immediate termination without
cause of Employee's employment hereunder.
4.2 Devotion Of Time and Effort. Employee shall use his good faith best
efforts and judgement in performing his duties as required hereunder and to act
in the best interests of the Company. Employee shall devote such time, attention
and energies to the business of the Company as are reasonably necessary to
satisfy Employee's required responsibilities and duties hereunder.
4.3 Other Activities. Employee may engage in other activities for his
own account during the term of this Contract including charitable activities,
community activities and/or other activities, subject to Section 7, below.
4.4 Vacation. It is understood and agreed that Employee shall be
entitled to three (3) weeks vacation per year. During such vacation periods,
Employee shall not be relieved of his duties under this Contract and there will
be no abatement or reduction of Employee's compensation hereunder.
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4.5 The Company's Obligations. The Company shall provide Employee with
any and all necessary or appropriate current financial information and access to
current information and records regarding all material transactions involving
the Company and/or its Subsidiaries or Affiliates, including but not limited to
acquisition of assets, personnel contracts, dispositions of assets, service
agreements and registration statements or other state or federal filings or
disclosures to carry out his duties and responsibilities hereunder. In addition,
the Company agrees to provide Employee, as a condition to his services
hereunder, such staff, equipment and office space as is reasonably necessary for
Employee to perform his duties hereunder.
5. TERMINATION.
5.1 By Company Without Cause. The Company may terminate this Contract,
without cause provided that the Company first delivers to Employee the Company's
written election to terminate this Contract at least 90 days prior to the
effective date of termination.
5.2 Severance Payment
(a) Amount. In the event the Company terminates Employee's services
hereunder pursuant to Section 5.1, Employee shall continue to render services
pursuant hereto until the date of termination and shall continue to receive
compensation, as provided hereunder, through the termination date. In addition
to other compensation payable to Employee for services through the termination
date, the Company shall pay Employee, as a single severance payment an amount
equal to one and one-half (1 1/2) times Employee's highest compensation paid
hereunder for any Employment Year, or if greater, that remainder which is
payable under Section 2.1. In addition to other compensation payable to Employee
for services, the Company shall pay Employee a car allowance ($500/month) and
medical benefits under Section 3.4 for a period of twelve (12) months following
termination.
(b) Limitation. The foregoing notwithstanding, the total of such
severance payments shall be reduced to the extent the payment of such amount
would cause Employee's total termination benefits (as determined by Employee's
tax advisor) to constitute an "excess" parachute payment under Section 280G of
the Internal Revenue Code of 1986 (the "Code") and by reason of such excess
parachute payment Employee would be subject to an excise tax under Section
4999(a) of the Code, but only if Employee determines that the after-tax value of
the termination benefits calculated with the foregoing restriction exceed those
calculated without the foregoing restriction.
5.3 By The Company For Cause. The Company may terminate Employee for
cause at any time, upon written notice. For the purposes hereof, "cause" shall
mean:
(a) Employee's conviction of a felony; or
(b) Employee's conviction for the crime of theft, embezzlement or
misappropriation against the Company; or
(c) The final determination by a court of competent jurisdiction or
by the board of directors that Employee has materially breached Sections 4, 6 or
7 of this Contract, if such breach is incurable; or, if curable, a determination
that Employee had been given reasonable opportunity to cure and had not done so;
or
(d) Employee's death or permanent disability.
In the event Employee is terminated for cause pursuant to this Section
5.3, Employee shall have the right to receive his compensation as otherwise
provided under this Contract through the effective date of termination. Employee
shall have no further right to receive compensation or other consideration from
the
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the Company, or have any other remedy whatsoever against the Company as a result
of this Contract or the termination thereof.
The foregoing notwithstanding, in the event Employee is terminated by
reason of his permanent disability (but not death) the Company shall immediately
pay Employee a single severance payment equal to one-half (1/2) of the
compensation paid Employee during any Employment Year or, if greater, that which
is payable for the Employment Year in which this Contract is terminated. Said
payment shall be in addition to any disability insurance payments or other
compensation earned hereunder.
5.4 Employee's Termination For Cause. Employee may, at any time upon 10
days' prior written notice to the Company, terminate this Contract if:
(a) The Company is in material breach of its obligations hereunder;
and
(b) Either such breach is incurable or, if curable, has not been
cured within 15 days' prior written notice thereof to the Company by Employee.
In the event Employee terminates this Contract pursuant to this Section
5.4, Employee shall have the same rights and remedies against the Company as he
would have had the Company terminated his employment without cause pursuant to
Section 5.1 hereof (including the right to payment under Section 5.2).
5.5 Employee's Voluntary Termination or Termination for Cause. Employee
may, at any time, terminate this Contract without cause upon written notice
delivered to the Company at least ninety (90) days prior to the effective date
of termination.
In the event of such voluntary termination:
(a) Employee shall have the right to monetary compensation as
provided hereunder through the effective date of termination, but shall have no
further right to compensation thereafter; and
(b) Employee's stock options shall be null and void as of the date
of termination except as provided in Section 5.6 below; and
(c) Employee shall not, for a period of one (1) year following the
date of termination for cause or voluntary termination, provide services
relating to the acquisition, development or management of commercial real estate
to any person who directly competes with the Company in the acquisition,
development and management of commercial real estate. Nothing herein shall
relieve or limit Employee's compliance with Sections 6, 7 and 8 below. The
Company shall not have any further right or remedy in the event Employee
terminates this Contract pursuant to this Section 5.5 except as provided in
Sections 6, 7 and 8 hereof which shall remain in full force and effect.
5.6 Employee's Retention Of Securities. In the event the Company
terminates Employee, whether or not for cause, Employee shall retain all options
and other securities he then owns, of record or otherwise, of the Company or its
Affiliates, subject to the terms, conditions and restrictions contained in the
Employees' Stock Option Agreement.
6. UNFAIR COMPETITION
6.1 Trade Secrets. During the term of employment under this Contract,
Employee will have access to and become acquainted with various information not
generally available to the public consisting of records, documents, drawings,
specifications, customer lists, procedural and operational manuals and
information, and financial records and accounts, projections and budgets, and
similar information, all of which
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are owned by the Company and regularly used in the operation of the Company's
business. Such assets of the Company are secret, not generally available to the
public and give the Company an advantage over competitors who do not know of or
use such information. Employee agrees such information and documents constitute
"trade secrets" of the Company. All such information and documents relating to
the business of the Company, whether they are prepared by Employee or come in to
Employee's possession in any other way, owned by the Company, are and shall
remain the exclusive property of the Company and shall not be removed from the
premises of the Company under any circumstances whatsoever, without prior
written consent of the Company.
6.2 Misuse Of Trade Secrets. Employee covenants that he shall not
misuse, misappropriate, or disclose any of the trade secrets described above,
directly or indirectly, or use them in any way, either during the term of this
Contract or at any time thereafter except as required in the course of his
employment, agreed to in prior writing by the Company, or as may be required by
law.
6.3 Non-Disclosure Of Trade Secrets. Employee acknowledges and agrees
that the sale or unauthorized use or disclosure of any of the Company's trade
secrets, as above described, including information concerning the Company's
current, future and/or proposed work, services or investments, the facts that
any such work, services or investments are planned, under consideration, or
under negotiation, as well as any descriptions thereof, constitute "unfair
competition". Employee promises and agrees not to engage in any unfair
competition with the Company, either during the term of this Contract or at any
time thereafter.
7. NON-COMPETITION DURING EMPLOYMENT
7.1 Competitive Activities. During the term of this Contract, Employee
shall not, without the Company's prior written consent, directly or indirectly,
whether or not for compensation, either as an employee, employer, consultant,
agent, principal, partner, stockholder, corporate officer, director or in any
other individual or representative capacity, engage or participate in, or
render, directly or indirectly, any services in connection with any business
that is in competition, in any manner whatsoever, with the business of the
Company.
7.2 Exceptions. The foregoing shall exclude, however, the expenditure of
a reasonable amount of time for educational, charitable or professional
activities, which shall not be deemed a breach of this Contract, if such
activities do not materially interfere with the services required under this
Contract.
7.3 Passive Investments; Private Affairs. Subject to the provisions of
Section 6, this Contract shall not be interpreted to prevent Employee from
making passive, personal investments or conducting private business affairs, if
those activities do not materially interfere with the services required under
this Contract and do not directly compete with the business of the Company.
However, Employee shall not directly or indirectly acquire, hold or retain any
interest in any business competing with or of similar nature to the business of
the Company except as provided in Section 4.3 above.
8. SOLICITATION OF EMPLOYEES, CONTRACTS
8.1 Use of Information. Employee acknowledges and agrees that the names,
addresses and relationships of persons who perform services or provide goods or
materials to or for the Company are unique; and that the nature and substance of
the Company's relationship with such persons constitute the Company's "trade
secrets". Employee acknowledges that the sale or unauthorized use or disclosure
of any of such relationships which Employee learned of during his employment
with the Company would constitute unfair competition. Employee promises and
agrees not to engage in any unfair competition with the Company.
8.2 Non-Disclosure. During the term of his employment by the Company,
and for a period of two years thereafter, Employee shall not, directly or
indirectly, make known to any person, firm or Company the
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substance or content of any relationship of the Company with any employee,
independent contractor or provider of goods or materials to the Company.
Employee agrees that he shall not solicit, take away or induce any such person
to end their relationship with the Company, or to attempt to do any of the
foregoing; or recruit, hire or otherwise induce any such person to perform
services for Employee, or any other person, firm or Company.
9. INDEMNIFICATION
The Company shall indemnify Employee for all losses sustained by
Employee as a direct or indirect consequence of the discharge of his duties on
behalf of the Company to the fullest extent permitted under applicable law so
long as Employee acted or failed to act in good faith and in a manner which he
believed to be in the best interests of the Company with respect to the matter
giving rise to the claim or loss for which Employee seeks indemnification.
10. BUSINESS EXPENSES
The Company shall promptly, but in no event later than ten (10) days
after submission of a claim of expenditure, reimburse Employee for all
reasonable business expenses incurred by him in connection with the business of
the Company and/or its subsidiary Companies, upon presentation to the Company of
written receipts for such expenses.
11. MISCELLANEOUS PROVISIONS
11.1 Binding Effect. This Contract shall be binding upon and inure to
the benefit of any successor or successors of the Company and the personal
representatives of Employee.
11.2 Attorney's Fees. If any legal action, arbitration or other
proceeding, is brought for the enforcement of this Contract, or because of an
alleged dispute, breach or default in connection with any of the provisions of
this Contract, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which that party would be entitled.
11.3 Entire Contract. This Contract constitutes the entire agreement of
the parties, and supersedes all prior agreements, understandings and
negotiations, whether written or oral, between the Company and Employee with
respect to the employment of Employee by the Company, its Subsidiaries and
Affiliates. This Contract may not be changed orally, but only by agreement in
writing, signed by all parties.
11.4 Provisions Severable. In case any one or more provisions of this
Contract shall be invalid, illegal or unenforceable, in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be affected or impaired thereby.
IN WITNESS HEREOF, the parties hereto have executed this Contract in San
Diego County, California.
THE COMPANY: EMPLOYEE:
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EXCEL LEGACY CORPORATION,
a Delaware corporation
By: /s/ S. Xxxx Xxxxxxx /s/ Xxxxx X. Xxxx
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XXXXX X. XXXX
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