Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 23/rd/ day of
June, 1999, by Crestline Capital Corporation, a corporation formed under the
laws of the State of Maryland with its principal place of business at 0000
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX 00000 ("Crestline") and Xxxxx X.
Xxxxxxxxx, residing at 0000 Xxxxxx Xxxxx, Xxxxxxx Xxxxxxx, XX 00000 ("Xx.
Xxxxxxxxx").
WHEREAS, Crestline desires to employ Xx. Xxxxxxxxx and Xx. Xxxxxxxxx
desires to be employed by Crestline; and
WHEREAS, the parties wish to set forth the terms and conditions of that
employment;
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment
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Crestline hereby employs Xx. Xxxxxxxxx, and Xx. Xxxxxxxxx hereby accepts
employment with Crestline, upon the terms and conditions set forth in this
Agreement. Unless terminated earlier pursuant to Section 5, Xx. Xxxxxxxxx'x
employment pursuant to this Agreement shall be for the three (3)-year period
commencing on January 1, 1999 (the "Commencement Date") and ending on December
31, 2001 (the "Initial Term"), and thereafter shall automatically renew for
successive twenty-four (24) month periods (each of which shall be an "Additional
Term"). The Initial Term, together with any Additional Term, shall be referred
to herein as the "Employment Period."
2. Title; Duties
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(a) Xx. Xxxxxxxxx shall be employed as President and Chief Executive
Officer of Crestline, and shall serve as Chairman of the Board of Directors
of Crestline (the "Board of Directors"). Xx. Xxxxxxxxx shall report to the
Board of Directors, who shall have the authority to direct, control and
supervise the activities of Xx. Xxxxxxxxx. Xx. Xxxxxxxxx shall perform such
services consistent with his position as may be assigned to him from time
to time by the Board of Directors and are consistent with the bylaws of
Crestline, including, but not limited to, managing the affairs of
Crestline.
(b) Xx. Xxxxxxxxx'x place of employment shall be Bethesda, Maryland, or
such other location within a 75-mile radius of the address first written
above as the Board of Directors shall direct; provided, however, that Xx.
Xxxxxxxxx'x duties may require extensive travel.
3. Extent of Services
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(a) General. Xx. Xxxxxxxxx agrees not to engage in any business activities
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during the Employment Period except those which are for the sole benefit of
Crestline, and to devote his entire business time, attention, skill and
effort to the performance of his duties under this Agreement.
Notwithstanding the foregoing, Xx. Xxxxxxxxx may (i) engage in personal
investments and charitable, professional and civic activities which do not
impair the performance of his duties to Crestline, and (ii) serve on the
boards of directors of corporations other than Crestline, provided,
however, that Xx. Xxxxxxxxx shall resign promptly from any board of
directors if directed to do so by Crestline's Board of Directors in its
sole discretion. In no event shall Xx. Xxxxxxxxx serve on the board of
directors of any corporation that engages in any activities in competition
with those of Crestline. Xx. Xxxxxxxxx shall perform his duties to the best
of his ability, shall adhere to Crestline's published policies and
procedures, and shall use his best efforts to promote Crestline's
interests, reputation, business and welfare.
(b) Corporate Opportunities. Xx. Xxxxxxxxx agrees that he will not take
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personal advantage of any business opportunities which arise during his
employment with Crestline and which may be of benefit to Crestline. All
material facts regarding such opportunities must be promptly reported to
the Board of Directors for consideration by Crestline.
4. Compensation and Benefits
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(a) Salary. Crestline shall pay Xx. Xxxxxxxxx a gross base annual salary
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("Base Salary") of $530,000. The salary shall be payable in arrears in
approximately equal semi-monthly installments (except that the first and
last such semi-monthly installments may be prorated if necessary) on
Crestline's regularly scheduled payroll dates, minus such deductions as may
be required by law or reasonably requested by Xx. Xxxxxxxxx. Crestline's
Compensation Policy Committee (the "Compensation Committee") shall review
his Base Salary annually in conjunction with its regular review of employee
salaries and make such adjustments, if any, to his Base Salary as the
Compensation Committee shall deem appropriate.
(b) Stock Options. At the meeting of the Compensation Committee to be held
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in or about January 2000, the Compensation Committee may approve the grant
to Xx. Xxxxxxxxx of an option to purchase 250,000 shares of Crestline
common stock at an exercise price equal to the greater of $19.82 per share
or Fair Market Value as that term is defined in Crestline's 1998
Comprehensive Stock Incentive Plan as the same may be amended from time to
time (the "Plan"), and such grant shall be set forth in a stock option
agreement between Crestline and Xx. Xxxxxxxxx (the "Stock Option
Agreement"). Xx. Xxxxxxxxx'x right to purchase two-thirds of the shares
under such stock option shall vest on the first anniversary of the date of
grant and his right to purchase one-third of the Shares under such stock
option shall vest on the second anniversary of the date of grant, subject
to the terms and conditions of the Plan and the Stock Option Agreement, and
subject to accelerated vesting as set forth in Section 6(c), (d), (e) and
(f) of this Agreement.
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(c) Other Awards. Crestline and Xx. Xxxxxxxxx each acknowledge and agree
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that on January 21, 1999, he was awarded (i) an option to purchase 500,000
shares of Crestline common stock at an exercise price of $9.91; (ii) an
option to purchase 250,000 shares of Crestline common stock at an exercise
price of $14.86; and (iii) 120,000 shares of restricted Crestline stock.
(d) Other Benefits. Xx. Xxxxxxxxx shall be entitled to paid time off and
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holiday pay in accordance with Crestline's policies in effect from time to
time and to participate in such life, health, and disability insurance,
pension, deferred compensation and incentive plans, stock options and
awards, performance bonuses and other benefits as Crestline extends, as a
matter of policy, to its executive employees.
(e) Reimbursement of Business Expenses. Crestline shall reimburse Mr.
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Xxxxxxxxx for all reasonable travel, entertainment and other expenses
incurred or paid by Xx. Xxxxxxxxx in connection with, or related to, the
performance of his duties, responsibilities or services under this
Agreement, upon presentation by Xx. Xxxxxxxxx of documentation, expense
statements, vouchers, and/or such other supporting information as Crestline
may reasonably request.
5. Termination
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(a) Termination by Crestline for Cause. Crestline may terminate Mr.
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Xxxxxxxxx'x employment under this Agreement at any time for Cause, upon
written notice by Crestline to Xx. Xxxxxxxxx. For purposes of this
Agreement, "Cause" for termination shall mean any of the following: (i) the
conviction of Xx. Xxxxxxxxx of, or the entry of a plea of guilty or nolo
contendere by Xx. Xxxxxxxxx to, any felony; (ii) fraud, misappropriation or
embezzlement by Xx. Xxxxxxxxx; (iii) Xx. Xxxxxxxxx'x willful failure or
gross negligence in the performance of his assigned duties for Crestline,
which failure or negligence continues for more than thirty (30) calendar
days following Xx. Xxxxxxxxx'x receipt of written notice of such willful
failure or gross negligence; (iv) Xx. Xxxxxxxxx'x breach of his fiduciary
duty to Crestline; (v) any act or omission of Xx. Xxxxxxxxx that has a
demonstrated and material adverse impact on Crestline's reputation for
honesty and fair dealing; or (vi) the breach by Xx. Xxxxxxxxx of any
material term of this Agreement.
(b) Termination by Crestline or Xx. Xxxxxxxxx Without Cause. Either party
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may terminate this Agreement at any time without Cause, upon giving the
other party sixty (60) days written notice. At Crestline's sole discretion,
it may substitute sixty (60) days salary in lieu of notice. Any salary paid
to Xx. Xxxxxxxxx in lieu of notice shall not be offset against any
entitlement Xx. Xxxxxxxxx may have to the Severance Payment pursuant to
Section 6(c).
(c) Termination by Xx. Xxxxxxxxx for Good Reason. Xx. Xxxxxxxxx may
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terminate his employment under this Agreement at any time for Good Reason,
upon written notice by Xx. Xxxxxxxxx to Crestline. For purposes of this
Agreement, "Good Reason" for termination shall mean (i) the assignment to
Xx. Xxxxxxxxx of substantial duties or responsibilities inconsistent with
Xx. Xxxxxxxxx'x position at Crestline, or any other
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action by Crestline which results in a substantial diminution of Xx.
Xxxxxxxxx'x duties or responsibilities; (ii) a requirement by Crestline
that Xx. Xxxxxxxxx work principally from a location outside the 75-mile
radius specified in Section 2(b); (iii) Crestline's failure to pay Xx.
Xxxxxxxxx any Base Salary or other compensation to which he is entitled,
other than an inadvertent failure which is remedied by Crestline within
thirty (30) days after receipt of written notice thereof from Xx. Xxxxxxxxx
(or five (5) days in the case of failure to pay Base Salary); or (iv) a
substantial reduction in Xx. Xxxxxxxxx'x aggregate Base Salary and other
compensation taken as a whole, excluding any reductions caused by the
failure to achieve performance targets.
(d) Xx. Xxxxxxxxx'x Death or Disability. Xx. Xxxxxxxxx'x employment shall
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terminate immediately upon his death or, upon written notice as set forth
below, his disability. As used in this Agreement, "Disability" shall mean
such physical or mental impairment as would render Xx. Xxxxxxxxx eligible
to receive benefits under the long-term disability insurance plan then made
available by Crestline to its employees. If the Employment Period is
terminated by reason of Xx. Xxxxxxxxx'x Disability, either party shall give
thirty (30) days advance written notice to that effect to the other.
6. Effect of Termination
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(a) General. Regardless of the reason for any termination of this
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Agreement, Xx. Xxxxxxxxx shall be entitled to (i) payment of any unpaid
portion of his Base Salary through the effective date of termination; (ii)
reimbursement for any outstanding reasonable business expense he has
incurred in performing his duties hereunder; (iii) continued insurance
benefits to the extent required by law; and (iv) payment of any vested but
unpaid rights as required independent of this Agreement by the terms of any
bonus or other incentive pay or stock plan, or any other employee benefit
plan or program of Crestline.
(b) Termination by Crestline for Cause or by Xx. Xxxxxxxxx Without Good
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Reason. If Crestline terminates Xx. Xxxxxxxxx'x employment for Cause or
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Xx. Xxxxxxxxx terminates his employment without Good Reason, Xx. Xxxxxxxxx
shall have no rights or claims against Crestline except to receive the
payments and benefits described in Section 6(a).
(c) Termination by Crestline Without Cause or by Xx. Xxxxxxxxx for Good
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Reason. If Crestline terminates Xx. Xxxxxxxxx'x employment without Cause
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pursuant to Section 5(b), or Xx. Xxxxxxxxx terminates his employment for
Good Reason pursuant to Section 5(c), Xx. Xxxxxxxxx shall be entitled to
receive, in addition to the items referenced in Section 6(a), the
following:
(i) an amount equal to his Base Salary at the rate in effect on his
last day of employment for a period of twenty-four (24) months (the
"Severance Payment"). The Severance Payment shall be paid in
approximately equal installments on Crestline's regularly scheduled
payroll dates, subject to all legally required payroll deductions and
withholdings for sums owed by Xx. Xxxxxxxxx to Crestline;
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(ii) continued payment by Crestline for Xx. Xxxxxxxxx'x life, health
and disability insurance coverage during the twenty-four (24) month
severance period referenced in Section 6(c)(i) to the same extent that
Crestline paid for such coverage immediately prior to the termination
of Xx. Xxxxxxxxx'x employment and subject to the eligibility
requirements and other terms and conditions of such insurance
coverage, provided that if any such insurance coverage shall become
unavailable during the twenty-four (24) month severance period,
Crestline thereafter shall be obliged only to pay to Xx. Xxxxxxxxx an
amount equal to the employer premiums for such insurance for the
remainder of such severance period;
(iii) vesting as of the last day of his employment in any unvested
portion of any stock option and any restricted stock previously issued
to Xx. Xxxxxxxxx; and
(iv) a pro-rata share of any bonus to which Xx. Xxxxxxxxx otherwise
would have been entitled for the fiscal year in which his employment
terminates without Cause or for Good Reason. Such pro-rated bonus
shall be paid to Xx. Xxxxxxxxx within sixty (60) days following the
end of the fiscal year in which such termination occurs.
(d) Termination Following Change in Control.
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(i) If, by giving sixty (60) days written notice commencing within
twenty-four (24) months following a Change in Control, Crestline (or
its successor) terminates Xx. Xxxxxxxxx'x employment without Cause or
Xx. Xxxxxxxxx terminates his employment for any reason, he shall be
entitled to the Severance Payment, continued insurance benefits,
accelerated vesting and pro-rated bonus set forth in Section 6(c). For
purposes of this Agreement, a "Change in Control" shall mean any of
the following events:
(A) The ownership or acquisition (whether by a merger
contemplated by Section 6(d)(i)(B) below, or otherwise)
by any Person (other than a Qualified Affiliate), in a
single transaction or a series of related or unrelated
transactions, of Beneficial Ownership of thirty-five
percent (35%) or more of (1) Crestline's outstanding
common stock (the "Common Stock") or (2) the combined
voting power of Crestline's outstanding securities
entitled to vote generally in the election of directors
(the "Outstanding Voting Securities");
(B) The merger or consolidation of Crestline with or
into any other Person other than a Qualified Affiliate,
if, immediately following the effectiveness of such
merger or consolidation, Persons who did not
Beneficially Own Outstanding Voting Securities
immediately before the effectiveness of such merger or
consolidation directly or indirectly Beneficially Own
more than thirty-five percent (35%) of the outstanding
shares of voting stock
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of the surviving entity of such merger or consolidation
(including for such purpose in both the numerator and
denominator, shares of voting stock issuable upon the
exercise of then outstanding rights (including
conversion rights), options or warrants) ("Resulting
Voting Securities"), provided that, for purposes of
this Section 6(d)(i)(B), if a person who Beneficially
Owned Voting Securities immediately before the merger
or consolidation Beneficially Owns a greater number of
the Resulting Voting Securities immediately after the
merger or consolidation than the number the Person
received solely as a result of the merger or
consolidation, that greater number will be treated as
held by a Person who did not Beneficially Own Voting
Securities before the merger or consolidation, and
provided further that such merger or consolidation
would also constitute a Change in Control if it would
satisfy the foregoing test if rights, options and
warrants were not included in the calculation;
(C) Any one or a series of related sales or
conveyances to any Person other than any one or more
Qualified Affiliates of all or substantially all of the
assets of Crestline, but excluding sales or conveyances
in connection with either the normal expiration or
other termination of Crestline's hotel leases with Host
Marriott Corporation or the affiliates of Host Marriott
Corporation, or the termination of such hotel leases
following a Tax Law Change, as defined herein;
(D) Incumbent directors cease to be a majority of the
members of the Board, where an "Incumbent Director" is
(1) an individual who is a member of the Board on the
effective date of this Agreement or (2) any new
director whose appointment or election by the Board or
whose nomination for election by the stockholders was
approved by a majority of the persons who were already
Incumbent Directors, other than any individual who
assumes office initially as a result of an actual or
threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board;
(E) Any other event that the Board determines, in its
discretion and with reference to "Change in Control,"
would materially alter the structure or business of the
Company or its ownership; or
(F) A Change in Control shall also be deemed to have
occurred immediately before the completion of a tender
offer for Crestline's securities representing more than
thirty five percent (35%) of the Outstanding
Securities, other than a tender offer by a Qualified
Affiliate.
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(G) For purposes of this Agreement, the following
definitions shall apply:
(1) "Beneficial Ownership," "Beneficially Owned"
and "Beneficially Owns" shall have the meanings
provided in Exchange Act Rule 13d-3;
(2) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended;
(3) "Person" shall mean any individual, entity,
or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act), including any natural
person, corporation, trust, association, company,
partnership, joint venture, limited liability company,
legal entity of any kind, government, or political
subdivision, agency or instrumentality of a government,
as well as two or more Persons acting as a partnership,
limited partnership, syndicate or other group for the
purpose of acquiring, holding or disposing of Crestline
securities; and
(4) "Qualified Affiliate" shall mean (i) any
directly or indirectly wholly owned subsidiary of
Crestline, (ii) any employee benefit plan (or related
trust) sponsored or maintained by Crestline or by any
entity controlled by Crestline; or (iii) any Person
consisting of one or more individuals who are then
Crestline's Chief Executive Officer or any other named
executive officer (as defined in Item 402 of Regulation
S-K under the Securities Act of 1933) of Crestline as
indicated in its most recent securities filing made
before the date of the transaction.
(ii) (A) In the event that any Severance Payment, insurance benefits,
accelerated vesting, pro-rated bonus or other benefit payable to Xx.
Xxxxxxxxx shall (1) constitute "parachute payments" within the meaning
of Section 280G (as it may be amended or replaced) of the Internal
Revenue Code (the "Code") ("Parachute Payments") and (2) be subject to
the excise tax imposed by Section 4999 (as it may be amended or
replaced) of the Code ("the Excise Tax"), then Crestline shall pay to
Xx. Xxxxxxxxx an additional amount (the "Gross-Up Amount") such that
the net benefits retained by Xx. Xxxxxxxxx after the deduction of the
Excise Tax (including interest and penalties) and any federal, state
or local income taxes (including interest and penalties) upon the
Gross-Up Amount shall be equal to the benefits that would have been
delivered hereunder had the Excise Tax not been applicable and the
Gross-Up Amount not paid.
(B) For purposes of determining the Gross-Up Amount: (1)
Parachute Payments provided under arrangements with Xx. Xxxxxxxxx
other than the Plan and this Agreement, if any, shall be taken into
account in determining the total amount of Parachute Payments received
by Xx. Xxxxxxxxx so that the amount of excess Parachute Payments that
are attributable to provisions of the Plan and Agreement is maximized;
and (2) Xx. Xxxxxxxxx shall be deemed to pay federal,
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state and local income taxes at the highest marginal rate of taxation
for Xx. Xxxxxxxxx'x taxable year in which the Parachute Payments are
includable in Xx. Xxxxxxxxx'x income for purposes of federal, state
and local income taxation.
(C) The determination of whether the Excise Tax is payable, the
amount thereof, and the amount of any Gross-Up Amount shall be made in
writing in good faith by a nationally recognized independent certified
public accounting firm approved by Crestline and Xx. Xxxxxxxxx, such
approval not to be unreasonably withheld (the "Accounting Firm"). If
such determination is not finally accepted by the Internal Revenue
Service (or state or local revenue authorities) on audit, then
appropriate adjustments shall be computed based upon the amount of
Excise Tax and any interest or penalties so determined; provided,
however, that Xx. Xxxxxxxxx in no event shall owe Crestline any
interest on any portion of the Gross-Up Amount that is returned to
Crestline. For purposes of making the calculations required by this
Section 6(d)(ii), to the extent not otherwise specified herein,
reasonable assumptions and approximations may be made with respect to
applicable taxes and reasonable, good faith interpretations of the
Code may be relied upon. Crestline and Xx. Xxxxxxxxx shall furnish
such information and documents as may be reasonably requested in
connection with the performance of the calculations under this Section
6(d)(ii). Crestline shall bear all costs incurred in connection with
the performance of the calculations contemplated by this Section
6(d)(ii). Crestline shall pay the Gross-Up Amount to Xx. Xxxxxxxxx no
later than sixty (60) days following receipt of the Accounting Firm's
determination of the Gross-Up Amount.
(e) Termination Following Tax Law Change. If, by giving sixty (60) days
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written notice commencing within twenty four (24) months following a Tax
Law Change, Crestline terminates Xx. Xxxxxxxxx'x employment without Cause
or Xx. Xxxxxxxxx terminates his employment for any reason, he shall be
entitled to the Severance Payment, accelerated vesting and pro-rated bonus
set forth in Section 6(c). For purposes of this Agreement, a "Tax Law
Change" shall mean any change in the Code (including, without limitation, a
change in the United States Treasury regulations promulgated thereunder),
or in the judicial or administrative interpretations of the Code, which
would permit Host Marriott Corporation or another entity or entities in
which Host Marriott Corporation owns a substantial economic interest to
operate all or substantially all the hotels owned by Host Marriott
Corporation or such affiliated entity or entities without adversely
affecting Host Marriott Corporation's qualification for taxation as a real
estate investment trust under applicable Code provisions.
(f) Additional Payment in Event of Termination Following Change in Control
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or Tax Law Change. In the event that Xx. Xxxxxxxxx'x employment terminates
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following a Change in Control or Tax Law Change, within the time periods
and upon the notices set forth in Sections 6(d) and (e), and the last day
of Xx. Xxxxxxxxx'x employment precedes the Compensation Committee meeting
referenced in Section 4(b), Crestline may pay to Xx. Xxxxxxxxx an amount
calculated according to the following formula: 250,000 multiplied by the
amount, if any, by which the average of the highest and lowest quoted
selling prices for a share of Crestline's common stock on the date of
termination of
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employment, or (if there were no sales on such date) the average so
computed on the nearest day before and the nearest day after the relevant
date, as reported in the Wall Street Journal, exceeds $19.82 per share. The
amounts of 250,000 and $19.82 per share shall be adjusted to account
equitably for any stock dividends, stock splits or other changes in
corporate capitalization (including those events constituting a Change in
Control) occurring between the effective date of this Agreement and Xx.
Xxxxxxxxx'x termination of employment. Such amount shall be in addition to
any other payments and benefits to which Xx. Xxxxxxxxx shall be entitled
pursuant to this Agreement, including without limitation any Gross-Up
Amount, if applicable, and shall be paid to Xx. Xxxxxxxxx within thirty
(30) days following his last day of employment.
(g) Termination In the Event of Death or Disability.
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(i) If Xx. Xxxxxxxxx'x employment terminates in the event of his
death, any unvested portion of any stock option and any restricted
stock previously issued to Xx. Xxxxxxxxx shall become fully vested as
of the date of his death. In addition, Xx. Xxxxxxxxx'x estate shall be
entitled to receive a pro-rata share of any performance bonus to which
he otherwise would have been entitled for the fiscal year in which his
death occurs.
(ii) In the event Xx. Xxxxxxxxx'x employment terminates due to his
Disability, he shall be entitled to receive his Base Salary until such
date as he shall commence receiving disability benefits pursuant to
any long-term disability insurance provided to him by Crestline. In
addition, as of the effective date of the termination notice specified
in Section 5(d), Xx. Xxxxxxxxx shall vest in any unvested portion of
any stock option and any restricted shares previously granted to him
by Crestline. Xx. Xxxxxxxxx also shall be entitled to receive a pro-
rata share of any performance bonus to which he otherwise would have
been entitled for the fiscal year in which his employment terminates
due to his Disability.
7. Confidentiality
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(a) Definition of Proprietary Information. Xx. Xxxxxxxxx acknowledges
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that he may be furnished or may otherwise receive or have access to
confidential information which relates to Crestline's past, present or
future business activities, strategies, services or products, research
and development; financial analysis and data; improvements,
inventions, processes, techniques, designs or other technical data;
profit margins and other financial information; fee arrangements;
terms and contents of leases, asset management agreements and other
contracts; tenant and vendor lists or other compilations for marketing
or development; confidential personnel and payroll information; or
other information regarding administrative, management, financial,
marketing, leasing or sales activities of Crestline, or of a third
party which provided proprietary information to Crestline on a
confidential basis. All such information, including any materials or
documents containing such information, shall be considered by
Crestline and Xx. Xxxxxxxxx as proprietary and confidential (the
"Proprietary Information").
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(b) Exclusions. Notwithstanding the foregoing, Proprietary Information
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shall not include (i) information disseminated by Crestline to third
parties in the ordinary course of business; or (ii) information in the
public domain not as a result of a breach of any duty by Xx. Xxxxxxxxx or
any other person.
(c) Obligations. Both during and after the Employment Period, Mr.
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Xxxxxxxxx agrees to preserve and protect the confidentiality of the
Proprietary Information and all physical forms thereof, whether disclosed
to him before this Agreement is signed or afterward. In addition, Xx.
Xxxxxxxxx shall not (i) disclose or disseminate the Proprietary Information
to any third party, including employees of Crestline without a legitimate
business need to know; (ii) remove the Proprietary Information from
Crestline's premises without a valid business purpose; or (iii) use the
Proprietary Information for his own benefit or for the benefit of any third
party.
(d) Return of Proprietary Information. Xx. Xxxxxxxxx acknowledges and
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agrees that all the Proprietary Information used or generated during the
course of working for Crestline is the property of Crestline. Xx. Xxxxxxxxx
agrees to deliver to Crestline all documents and other tangibles (including
diskettes and other storage media) containing the Proprietary Information
at any time upon request by the Board of Directors during his employment
and immediately upon termination of his employment.
8. Noncompetition
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(a) Restriction on Competition. For twelve (12) months following the
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expiration or termination of Xx. Xxxxxxxxx'x employment by Crestline for
any reason (the "Restricted Period"), Xx. Xxxxxxxxx agrees not to engage,
directly or indirectly, as an owner, employee, consultant, partner,
principal, agent, representative, stockholder, or in any other individual,
corporate or representative capacity, in any of the following: (i) acting
as a lessee for public or private real estate investment trusts; (ii) asset
management for hotel, independent living, assisted living or health-care
communities, or (iii) any other business that Crestline conducts as of the
date of Xx. Xxxxxxxxx'x termination of employment; provided, however, Xx.
Xxxxxxxxx shall not be deemed to have violated this Section 8(a) solely by
reason of his ownership of five percent (5%) or less of the outstanding
stock of any publicly traded corporation or other entity.
(b) Non-Solicitation of Clients. During the Restricted Period, Mr.
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Xxxxxxxxx agrees not to solicit, directly or indirectly, on his own behalf
or on behalf of any other person(s), any client of Crestline to whom
Crestline had provided services at any time during Xx. Xxxxxxxxx'x
employment with Crestline in any line of business that Crestline conducts
as of the date of Xx. Xxxxxxxxx'x termination of employment or that
Crestline is actively soliciting, for the purpose of marketing or providing
any service competitive with any service then offered by Crestline.
(c) Non-Solicitation of Employees. During the Restricted Period, Mr.
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Xxxxxxxxx agrees that he will not, directly or indirectly, hire or attempt
to hire or cause any business, other than an affiliate of Crestline, to
hire any person who is then or was at any time during the preceding six (6)
months an employee of Crestline and who is at the time of
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such hire or attempted hire, or was at the date of such employee's
separation from Crestline, either (i) in Grade Level 56 or above, or (ii) a
Crestline director, vice president, senior vice president or executive vice
president.
(d) Acknowledgement. Xx. Xxxxxxxxx acknowledges that he will acquire much
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Proprietary Information concerning the past, present and future business of
Crestline as the result of his employment, as well as access to the
relationships between Crestline and its clients and employees. Xx.
Xxxxxxxxx further acknowledges that the business of Crestline is very
competitive and that competition by him in that business during his
employment, or after his employment terminates, would severely injure
Crestline. Xx. Xxxxxxxxx understands and agrees that the restrictions
contained in this Section 8 are reasonable and are required for Crestline's
legitimate protection, and do not unduly limit his ability to earn a
livelihood.
(e) Exception. Notwithstanding any other provision of this Agreement, Mr.
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Xxxxxxxxx shall not be subject to the provisions of Section 8(a)-(d) of
this Agreement if his employment is terminated by Crestline (or its
successor) or Xx. Xxxxxxxxx following a Change in Control in accordance
with Section 6(d) or following a Tax Law Change in accordance with Section
6(e) of this Agreement.
9. Employee Representation
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Xx. Xxxxxxxxx represents and warrants to Crestline that he is not now under
any obligation of a contractual or other nature to any person, business or other
entity which is inconsistent or in conflict with this Agreement or which would
prevent him from performing his obligations under this Agreement.
10. Arbitration
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(a) Any disputes between Crestline and Xx. Xxxxxxxxx in any way concerning
Xx. Xxxxxxxxx'x employment, the termination of his employment, this
Agreement or its enforcement shall be submitted at the initiative of either
party to mandatory arbitration in Maryland before a single arbitrator
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association, or its successor, then in effect. The decision of the
arbitrator shall be rendered in writing, shall be final, and may be entered
as a judgment in any court in the State of Maryland. The parties
irrevocably consent to the jurisdiction of the federal and state courts
located in Maryland for this purpose. Each party shall be responsible for
its or his own costs incurred in such arbitration and in enforcing any
arbitration award, including attorneys' fees and expenses.
(b) Notwithstanding the foregoing, Crestline, in its sole discretion, may
bring an action in any court of competent jurisdiction to seek injunctive
relief and such other relief as Crestline shall elect to enforce Xx.
Xxxxxxxxx'x covenants in Sections 7 and 8 of this Agreement.
11. Miscellaneous
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(a) Notices. All notices required or permitted under this Agreement
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shall be in
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writing and shall be deemed effective (i) upon personal delivery, (ii) upon
deposit with the United States Postal Service, by registered or certified
mail, postage prepaid, or (iii) in the case of facsimile transmission or
delivery by nationally recognized overnight deliver service, when received,
addressed as follows:
(i) If to Crestline, to:
Crestline Capital Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxx X.X. Xxxxxx
Fax No. 240/000-0000
(ii) If to Xx. Xxxxxxxxx, to:
Xx. Xxxxx X. Xxxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx, XX 00000
or to such other address or addresses as either party shall designate to
the other in writing from time to time by like notice.
(b) Pronouns. Whenever the context may require, any pronouns used in this
--------
Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
(c) Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
(d) Amendment. This Agreement may be amended or modified only by a written
---------
instrument executed by both Crestline and Xx. Xxxxxxxxx.
(e) Governing Law. This Agreement shall be construed, interpreted and
-------------
enforced in accordance with the laws of the State of Maryland, without
regard to its conflicts of laws principles.
(f) Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of both parties and their respective successors and assigns,
including any entity with which or into which Crestline may be merged or
which may succeed to its assets or business or any entity to which
Crestline may assign its rights and obligations under this Agreement;
provided, however, that the obligations of Xx. Xxxxxxxxx are personal and
shall not be assigned or delegated by him.
(g) Waiver. No delays or omission by Crestline or Xx. Xxxxxxxxx in
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exercising any right under this Agreement shall operate as a waiver of that
or any other right. A waiver or consent given by Crestline or Xx. Xxxxxxxxx
on any one occasion shall be effective
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only in that instance and shall not be construed as a bar or waiver of any
right on any other occasion.
(h) Captions. The captions appearing in this Agreement are for convenience
--------
of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
(i) Severability. In case any provision of this Agreement shall be held by
------------
a court or arbitrator with jurisdiction over the parties to this Agreement
to be invalid, illegal or otherwise unenforceable, such provision shall be
restated to reflect as nearly as possible the original intentions of the
parties in accordance with applicable law, and the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
(j) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
XXXXX X. XXXXXXXXX CRESTLINE CAPITAL CORPORATION
________________________________ By: ________________________________
Xxxxx X. X. Xxxxxx
Senior Vice President
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