UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 27, 1996
TIS MORTGAGE INVESTMENT COMPANY
__________________________________________________________________________
(Exact name of registrant as specified in its charter)
Maryland 1-10004 94-3067889
__________________ ___________________ _____________________
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation or
organization)
655 Montgomery Street, Suite 800
San Francisco, California 94111
_______________________________________ __________
(Address of principal executive offices) (Zip Code)
(415) 393-8000
__________________________________________________________________________
(Registrant's telephone number, including area code)
<PAGE>
TIS MORTGAGE INVESTMENT COMPANY
Item 5. Other Events.
On June 27, 1996, the Board of Directors announced that as of July 1,
1996 the Company will be a self-administered Real Estate Investment Trust
and will no longer be managed by TIS Financial Services, Inc. ("TISFIS").
A copy of the press release is set forth as Exhibit 99.1.
In connection with becoming self-administered, the Company has entered
into a three-year employment agreement with Lorraine O. Legg, who will
serve as the Company's Chairman and President, a two-year employment
agreement with John E. Castello, who will serve as Executive Vice President
and Chief Financial Officer, and a Facilities and Expense Sharing Agreement
(the "Facilities Agreement") with TISFIS. A copy of each employment
agreement and the Facilities Agreement is set forth as Exhibits 10.1, 10.2
and 10.3, respectively.
The Company also announced that Patricia M. Howe has elected to
resign her office as Chairman of the Board of Directors effective June 30,
1996, but will continue to serve the Company as a director. Lorraine O.
Legg will succeed Ms. Howe as the Chairman of the Board.
The Board of Directors also announced that it approved a technical
amendment to the By-Laws to permit the Company to set the term of its
executives' employment according to the terms of approved employment
contracts. A copy of Amendment No. 1 to the Restated By-Laws of the
Company is set forth as Exhibit 3.2.
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit No. Description of Exhibits
- ----------- -----------------------
3.2 Amendment No. 1 to the Restated By-Laws.
10.1 Employment Agreement, dated July 1, 1996, between the
Company and Lorraine O. Legg.
10.2 Employment Agreement, dated July 1, 1996, between the
Company and John E. Castello.
10.3 Facilities and Expense Sharing Agreement, dated July 1,
1996, between the Company and TISFIS.
99.1 Press Release dated June 27, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TIS MORTGAGE INVESTMENT COMPANY
Dated: July 9, 1996 By: /s/ John E. Castello
--------------------------------------
JOHN E. CASTELLO, Executive Vice
President and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Item Page No.
3.2 Amendment No. 1 to the Restated By-Laws. 5
10.1 Employment Agreement, dated July 1, 1996, between 6
the Company and Lorraine O. Legg.
10.2 Employment Agreement, dated July 1, 1996, between 17
the Company and John E. Castello.
10.3 Facilities and Expense Sharing Agreement, dated 28
July 1, 1996, between the Company and TISFIS.
99.1 Press Release dated June 27, 1996. 37
Exhibit No. 3.2
TIS MORTGAGE INVESTMENT COMPANY
Amendment No. 1 to the Amended and Restated By-Laws
June 27, 1996
On June 27, 1996, Article III, Section 3.2, of the By-Laws of the
Company was amended to read in its entirety as follows:
SECTION 3.2. Election and Term of Office. The officers of
the Corporation shall be elected by the Board of Directors and,
subject to earlier termination of office, each officer shall hold
office for one year and until his successor shall have been
elected and qualified, except as otherwise provided in any
employment agreement between the Company and any officer.
Exhibit 10.1
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT ("Agreement"), effective as of the first day
of July, 1996, is entered into by and between Lorraine O. Legg
("Executive") and TIS Mortgage Investment Company, a Maryland corporation
(the "Company").
The Company desires to establish its right to the continued services
of the Executive in the capacity described below, on the terms and
conditions and subject to the rights of termination hereinafter set forth,
and the Executive is willing to accept such employment on such terms and
conditions.
In consideration of the mutual agreements hereinafter set forth, the
Executive and the Company have agreed and do hereby agree as follows:
1. EMPLOYMENT AS CHAIRMAN AND PRESIDENT OF THE COMPANY. The Company
does hereby employ, engage and hire the Executive as Chairman and President
of the Company, and the Executive does hereby accept and agree to such
hiring, engagement, and employment. The Executive's duties as Chairman and
President shall be such executive and managerial duties as the Board of
Directors of the Company shall from time to time prescribe and as provided
in the Bylaws of the Company, as amended from time to time; provided such
executive and managerial duties are consistent with the powers and duties
of the senior executive of the Company. The Executive shall devote such
time, energy and skill to the performance of her duties for the Company and
for the benefit of the Company as may be necessary or required for the
effective conduct and operation of the Company's business. Furthermore,
the Executive shall exercise due diligence and care in the performance of
her duties to the Company under this Agreement.
2. TERM OF AGREEMENT. The term ("Term") of this Agreement shall
commence on July 1, 1996 (the "Effective Date"), and shall continue through
the third anniversary of the Effective Date; provided, however, that on
the first and each succeeding anniversary of the Effective Date the Term
shall be automatically extended for one additional year, unless not later
than three months prior to any such anniversary, either party shall have
given written notice to the other that it does not wish to extend the Term
of the Agreement. The Executive shall commence the rendering of personal
services under this Agreement on the Effective Date.
3. COMPENSATION.
(a) BASE SALARY. Commencing on the Effective Date, the Company
shall pay the Executive, and the Executive agrees to accept from the
Company, in payment for her services to the Company a base salary of
$95,000 per annum ("Base Salary"), payable in equal biweekly installments
or at such other time or times as the Executive and Company shall agree.
The per annum amount of the Executive's Base Salary shall not be decreased
at any time during the Term of the Agreement from the highest per annum
amount theretofore paid.
(b) INCENTIVE BONUS. The Executive shall be eligible to receive
an annual incentive performance bonus (the "Incentive Bonus") based upon a
percentage of her Base Salary (except that the initial Incentive Bonus
shall be computed for the period commencing on the Effective Date and
ending on December 31, 1996, with reference to the Base Salary paid during
that period). Except as provided in Section 7, any Incentive Bonus awarded
to the Executive shall be payable in the amount, in the manner, and at the
time determined by the Company's Board of Directors in its sole and
absolute discretion.
(c) ANNUAL REVIEW. The Board of Directors shall, at least
annually, review the Executive's entire compensation package to determine
whether it continues to meet the Company's compensation objectives. Such
annual review will include a determination of (i) whether to increase the
Base Salary and (ii) the discretionary Incentive Bonus to be awarded in
accordance with Section 3(b).
4. FRINGE BENEFITS. The Executive shall be entitled to participate
in any benefit programs adopted from time to time by the Company for the
benefit of its executive employees, and the Executive shall be entitled to
receive such other fringe benefits as may be granted to her from time to
time by the Company's Board of Directors.
(a) BENEFIT PLANS. The Executive shall be entitled to
participate in any benefit plans relating to stock options, stock
purchases, pension, thrift, profit sharing, life insurance, disability,
medical coverage, education, or other retirement or employee benefits
available to other executive employees of the Company, subject to any
restrictions (including waiting periods) specified in such plans. No such
plans are currently in effect but, from the Effective Date and during the
term of this Agreement, the Company shall pay one-half (1/2) of the cost of
the Executive's present medical and disability insurance coverage from
Employers Health Insurance Company and UNUM Life Insurance Company of
America, respectively, or such other plans as shall be reasonably approved
by the Board and the Executive.
(b) VACATION. The Executive shall be entitled to (i) two (2)
weeks of paid vacation per calendar year for the first four (4) years of
service to the Company commencing on the Effective Date, and (ii) three (3)
weeks of paid vacation per calendar year after four (4) years of service to
the Company, with such vacation to be scheduled and taken in accordance
with the Company's standard vacation policies. The Executive shall be
entitled to such additional number of weeks of paid vacation per calendar
year as may be approved by the Board of Directors of the Company after
review of industry standards.
5. BUSINESS EXPENSES. The Company shall reimburse the Executive for
any and all necessary, customary and usual expenses, properly receipted in
accordance with Company policies, incurred by the Executive on behalf of
the Company.
6. TERMINATION OF EXECUTIVE'S EMPLOYMENT.
(a) DEATH. If the Executive dies while employed by the Company,
her employment shall immediately terminate. The Company's obligation to
pay the Executive's Base Salary shall cease as of the date of Executive's
death. Thereafter, Executive's beneficiaries or her estate shall receive
benefits in accordance with the Company's retirement, insurance and other
applicable programs and plans then in effect.
(b) DISABILITY. (i) If, as a result of the Executive's
incapacity due to physical or mental illness ("Disability"), Executive
shall have been absent from the full-time performance of her duties with
the Company for six (6) consecutive months, and, within thirty (30) days
after written notice is provided to her by the Company, she shall not have
returned to the full-time performance of her duties, the Executive's
employment under this Agreement may be terminated by the Company for
Disability. During any period prior to such termination during which the
Executive is absent from the full-time performance of her duties with the
Company due to Disability, the Company shall continue to pay the Executive
her Base Salary at the rate in effect at the commencement of such period of
Disability. Subsequent to such termination, the Executive's benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs.
(ii) If, however, as a result of the Executive's partial
incapacity due to physical or mental illness in which period Executive
shall not have been absent from her duties for six consecutive months and
shall have returned to work on a full-time basis but is not able to perform
at the same level as when hired and/or is not able to perform the same
functions originally hired for ("Partial Disability"), the Company shall
make reasonable efforts to accommodate the Executive's Partial Disability
by modifying her job description appropriately, together with a
commensurate adjustment in compensation; provided, however, the Company
shall be required to so continue the employment of the Executive in the
event of a Partial Disability of the Executive only if the Company
determines, in its sole discretion, that it can create a position for which
the Executive would be suited and that would be economically advantageous
to the Company.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may
terminate the Executive's employment under this Agreement for "Cause," at
any time prior to expiration of the Term of the Agreement without any
advance written notice, and the Company's obligation to pay the Executive's
Base Salary, any Incentive Bonus and fringe benefits shall cease as of the
termination date. As used herein, the term "Cause" shall mean (i) the
Executive's material breach of this Agreement, including without limitation
the failure to substantially perform the reasonable and lawful duties of
her position for the Company, which breach shall continue for 30 days after
notice thereof by the Company to the Executive, (ii) acts or omissions
constituting negligence, recklessness or willful misconduct on the part of
the Executive in respect of her fiduciary obligations or otherwise relating
to the business of the Company, or (iii) the Executive's conviction for
fraud, misappropriation or embezzlement.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive
shall have the right to terminate this Agreement for "Good Reason." As
used herein, the term "Good Reason" shall mean the occurrence, without the
Executive's express written consent, of any one or more of the following
events:
(i) A reduction in title of the Executive or the
assignment of duties to the Executive not consistent with those of a senior
executive of the Company, except in connection with the Company's
termination of the Executive's employment for Cause pursuant to Section
6(c) or as otherwise expressly contemplated herein;
(ii) The Company's material breach of any of the provisions
of this Agreement, including, but not limited to, a reduction by the
Company in the Executive's Base Salary in effect as of the Effective Date,
or as the same may be increased as provided herein; or a change in the
conditions of the Executive's employment (e.g., including, without
limitation, a reduction in any benefit plans in effect as of the Effective
Date or the benefits thereunder, etc.);
(iii) The relocation of the Company's principal executive
offices to a location more than 25 miles from its location as of the
Effective Date or the Company's requiring the Executive to be based
anywhere other than the Company's principal executive offices, except for
required travel on the Company's business to the extent necessary to meet
the standard set forth in the last two sentences of Section 1; or
(iv) A Change in Control as defined in Section 8 below.
The Executive agrees to provide the Company with thirty (30) days'
prior written notice of any termination for Good Reason.
(e) TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON.
The Executive may at any time during the Term terminate her employment
hereunder for any reason or no reason by giving the Company notice in
writing not less than one hundred twenty (120) days in advance of the
effective date of such termination. The Executive shall have no further
obligations to the Company after the effective date of termination, as set
forth in the notice. Notwithstanding the foregoing, in the event any
"person" (as defined in Section 8 below) begins a tender or exchange offer,
circulates a proxy to shareholders or takes other steps to effect a Change
in Control, the Executive agrees that she will not voluntarily leave the
employ of the Company, and will render services to the Company commensurate
with her position, until such person has abandoned or terminated efforts to
effect a Change in Control or until a Change in Control has occurred. In
the event of a termination by the Executive under this paragraph, the
Company will pay only the portion of Base Salary or previously awarded
Incentive Bonus unpaid as of the termination date. Fringe benefits which
have accrued and/or vested on the termination date will continue in effect
according to their terms, but no additional accrual or vesting will take
place.
7. COMPENSATION UPON TERMINATION BY THE COMPANY OTHER THAN FOR
CAUSE, OR BY THE EXECUTIVE FOR GOOD REASON. If the Executive's employment
shall be terminated (i) by the Company other than for Cause, or (ii) by the
Executive for Good Reason, the Executive shall be entitled to the following
benefits:
(a) PAYMENT OF UNPAID BASE SALARY. The Company shall
immediately pay the Executive any portion of the Executive's Base Salary or
previously awarded Incentive Bonus not paid prior to the termination date.
(b) SEVERANCE PAYMENT. The Company shall pay the Executive an
amount (the "Severance Amount") equal to 299% of the higher of (i) the
Executive's combined Base Salary and actual Incentive Bonus compensation
for the preceding fiscal year (annualized if a full fiscal year has not
been completed during the Term) or (ii) the average for the three preceding
years of the Executive's combined actual Base Salary and Incentive Bonus;
provided, however, that the Severance Amount shall not be less than
$283,100. The Severance Amount shall be payable 50% within five (5) days
after the termination date and the remaining 50% shall be payable in twelve
(12) equal consecutive monthly installments beginning on the first day of
the month following the termination date.
(c) EXCISE TAX. Notwithstanding anything to the contrary in
this Section 7, if any of the payments or other compensation to be made to
the Executive pursuant this Section 7 are determined to be "excess
parachute payments" as defined in Section 280G of the Internal Revenue Code
of 1986, as amended, (the "Code"), then the amount of such payments or
other compensation shall be reduced to the largest amount which would not
constitute "excess parachute payments" as so defined.
(d) IMMEDIATE VESTING OF STOCK OPTIONS. The Company shall take
all appropriate action to ensure that all stock options on the Company's
stock owned by the Executive now or in the future and which have not been
exercised prior to the termination date become immediately exercisable by
the Executive to the fullest extent permissible by the 1995 Stock Option
Plan (the "Plan"), as it may be amended from time to time, whether or not
the right to exercise such stock options would otherwise then be vested in
the Executive.
(e) CONTINUATION OF FRINGE BENEFITS. From and after termination
of the Executive's employment, the Company shall continue to provide the
Executive with any and all Fringe Benefits as if the Executive's employment
under the Agreement had not been terminated until the earlier to occur of
(i) such time as the Executive finds full-time employment or (ii)
completion of the Term remaining at the time of termination.
Notwithstanding the immediately preceding sentence, if, as the result of
termination of the Executive's employment, the Executive and/or her
otherwise eligible dependents or beneficiaries shall become ineligible for
benefits under any one or more of the Company's benefit plans or the cost
of providing such benefits exceeds 200% of the cost of providing such
benefits to other members of senior management, the Company, at the
Company's option, shall (i) continue to provide the Executive and her
eligible dependents or beneficiaries with benefits at a level at least
equivalent to the level of benefits for which the Executive and her
dependents and beneficiaries were eligible under such plans immediately
prior to the termination date or (ii) for any Fringe Benefit not so
provided, the Company shall pay the Executive 200% of the cost of providing
such Fringe Benefit to other members of senior management.
(f) NO MITIGATION REQUIRED; NO OTHER ENTITLEMENT TO BENEFITS
UNDER AGREEMENT. The Executive shall not be required in any way to
mitigate the amount of any payment provided for in this Section 7,
including, but not limited to, by seeking other employment, nor shall the
amount of any payment provided for in this Section 7 be reduced by any
compensation earned by the Executive as the result of employment with
another employer after the termination date of employment, or otherwise.
Except as set forth in this Section 7, following a termination governed by
this Section 7, the Executive shall not be entitled to any other
compensation or benefits set forth in this Agreement, except as may be
separately negotiated by the parties and approved by the Board of Directors
of the Company in writing in conjunction with the termination of
Executive's employment under this Section 7.
8. CHANGE IN CONTROL. A "Change in Control" shall be deemed to
have occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(a) Any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
(other than the Company; any trustee or other fiduciary holding securities
under an employee benefit plan of the Company; or any company owned,
directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of the stock of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company (not including
in the securities beneficially owned by such person any securities acquired
directly from the Company or from a transferor in a transaction expressly
approved or consented to by the a majority of the Continuing Directors
(defined below)) representing more than 20% of the combined voting power of
the Company's then outstanding securities; or
(b) At any time the Continuing Directors cease for any reason to
constitute a majority of the Board of Directors. "Continuing Directors"
shall mean individuals who, on the date of this Agreement, constitute the
Board of Directors and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect a
transaction described in clause (a), (c) or (d) of this section), whose
election by the Board of Directors or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date
of this Agreement or whose election or nomination for election was
previously so approved, or
(c) The shareholders of the Company approve a merger or
consolidation of the Company with any other entity, other than (i) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 75% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no person or group acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(d) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets
or earning power.
9. DISPUTE RELATING TO EXECUTIVE'S TERMINATION OF EMPLOYMENT FOR
GOOD REASON. If the Executive resigns her employment with the Company
alleging in good faith as the basis for such resignation any of the "Good
Reasons" specified in Section 6(d), and if the Company then disputes the
Executive's right to the payment of benefits under Section 7, the Company
shall continue to pay the Executive the full compensation (including, but
not limited to, her Base Salary) in effect at the date the Executive
provides notice of such resignation, and the Company shall continue the
Executive as a participant in all compensation, benefit and insurance plans
in which the Executive was then a participant, until the earlier of the
expiration of the Term or the date the dispute is finally resolved, either
by mutual written agreement of the parties or by decree of a court of
competent jurisdiction which is not appealable or with respect to which the
time for appeal has expired and no appeal has been perfected. For the
purposes of this Section 9, the Company shall bear the burden of proving
that the grounds for the Executive's resignation do not fall within the
scope of Section 6(d), and there shall be a rebuttable presumption that the
Executive alleged such grounds in good faith.
10. NONCOMPETITION PROVISIONS.
(a) NONCOMPETITION. The Executive agrees that during the Term
of this Agreement prior to any termination of her employment hereunder and
for a period of one year following the occurrence of any event entitling
the Executive to benefit payments provided under subparagraphs (a)-(e) of
Section 7, provided the Company makes all such payments when due according
to the provisions of Section 7, she will not, directly or indirectly,
without the prior written consent of the Company, manage, operate, join,
control, participate in, or be connected as a stockholder (other than as a
holder of ten percent (10%) or less of a class of shares publicly traded on
a stock exchange or on NASDAQ), partner, or other equity holder with, or as
an officer, director or employee of, any mortgage real estate investment
trust or multi-family residential real estate investment trust whose
business strategy is competitive with that of the Company, as determined by
a majority of the Company's independent directors ("Competing REIT");
provided, however, that a REIT shall not be deemed a "Competing REIT"
solely as a result of such REIT's purchase or sale of securities issued by
the Government National Mortgage Association, Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation for the purpose
of meeting income and asset tests required to maintain REIT status.
Notwithstanding the fact that consent of the Board of Directors shall not
be required for the Executive to become affiliated with entities other than
Competing REITS, it is expressly agreed that the Executive shall give
prompt written notice to the Board of Directors upon becoming a director,
officer, employee or more than ten percent (10%) shareholder, directly or
indirectly, of entities other than the Company, except for non-profit and
charitable organizations. It is further expressly agreed that the Company
will or would suffer irreparable injury if the Executive were to compete
with the Company or any subsidiary or affiliate of the Company in violation
of this Agreement and that the Company would by reason of such competition
be entitled to injunctive relief in a court of appropriate jurisdiction,
and the Executive further consents and stipulates to the entry of such
injunctive relief in such a court prohibiting the Executive from competing
with the Company or any subsidiary or affiliate of the Company, in the
areas of business set forth above, in violation of this Agreement. It is
further expressly agreed that the Executive's interest in and employment by
(i) any entity disclosed to the Board in writing prior to the date of this
Agreement, and (ii)TIS Financial Services, Inc. shall not be deemed to
violate any provisions of this Section, regardless of the scope of the
Executive's activities with such firm; provided, however, that the
Executive shall not in such capacity provide services, directly or
indirectly, to any Competing REIT without written approval of the Board of
Directors.
(b) RIGHT TO COMPANY MATERIALS. The Executive agrees that all
styles, designs, lists, materials, books, files, reports, correspondence,
records, and other documents ("Company Materials") used, prepared, or made
available to the Executive. shall be and shall remain the property of the
Company. Upon the termination of employment or the expiration of this
Agreement, all Company Materials shall be returned immediately to the
Company, and the Executive shall not make or retain any copies thereof.
(c) SOLICITING EXECUTIVES. The Executive promises and agrees
that she will not directly or indirectly solicit any of the Company
employees to work for any Competing REIT.
(d) DUTY OF LOYALTY. The Executive agrees, in accordance with
Maryland law, to first offer to the Company corporate opportunities learned
of solely as a result of her service as an officer and director of the
Company.
11. RESTRICTIONS ON OTHER MANAGEMENT. Until such time as the
Executive's employment pursuant to this Agreement is terminated, the
Company agrees that it shall not enter into a separate management agreement
or employment, consulting or other management arrangement with any other
person, group or entity to perform all or a substantial portion of the
duties performed by the Executive unless the Executive gives her written
consent to such an agreement or arrangement.
12. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by fax or first class
mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three (3) days after mailing or twenty-four
(24) hours after transmission of a fax to the respective persons named
below:
If to Company: TIS Mortgage Investment Company
655 Montgomery Street
Suite 800
San Francisco, CA 94111-2628
Phone: (415) 393-8000
Fax: (415) 393-8006
Attention: Board of Directors
with a copy to
(which shall not
constitute notice): M. Greg Allio, Esq.
Farella, Braun & Martel
235 Montgomery Street, 30th Floor
San Francisco, CA 94104
Phone: (415) 954-4400
Fax: (415) 954-4480
If to Executive: Lorraine O. Legg
Chairman and President
TIS Mortgage Investment Company
655 Montgomery Street
Suite 800
San Francisco, CA 94111-2628
Phone: (415) 393-8000
Fax: (415) 393-8006
Either party may change such party's address for notices by
notice duty given pursuant hereto.
13. ATTORNEYS' FEES. In the event judicial determination is
necessary of any dispute arising as to the parties' rights and obligations
hereunder, each party shall have the right, in addition to any other relief
granted by the court, to attorneys' fees based on a determination by the
court of the extent to which each party has prevailed as to the material
issues raised in determination of the dispute.
14. TERMINATION OF PRIOR AGREEMENT. This Agreement terminates and
supersedes any and all prior agreements and understandings between the
parties with respect to employment or with respect to the compensation of
the Executive by the Company.
15. ASSIGNMENT; SUCCESSORS. This Agreement is personal in its nature
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder;
provided that, in the event of the merger, consolidation, transfer, or sale
of all or substantially all of the assets of the Company with or to any
other individual or entity, this Agreement shall, subject to the provisions
hereof, be binding upon and inure to the benefit of such successor and such
successor shall discharge and perform all the promises, covenants, duties,
and obligations of the Company hereunder.
16. GOVERNING LAW. This Agreement and the legal relations thus
created between the parties hereto shall be governed by and construed under
and in accordance with the laws of the State of California.
17. ENTIRE AGREEMENT; HEADINGS. This Agreement embodies the entire
agreement of the parties respecting the matters within its scope and may be
modified only in writing. Section headings in this Agreement are included
here in for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
18. WAIVER, MODIFICATION. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed
a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times. This
Agreement shall not be modified in any respect except by a writing executed
by each party hereto.
19. SEVERABILITY. In the event that a court of competent
jurisdiction determines that any portion of this Agreement is in violation
of any statute or public policy, only the portions of this Agreement that
violate such statute or public policy shall be stricken. All portions of
this Agreement that do not violate any statute or public policy shall
continue in full force and effect. Further, any court order striking any
portion of this Agreement shall modify the stricken terms as narrowly as
possible to give as much effect as possible to the intentions of the
parties under this Agreement.
20. INDEMNIFICATION. The Company shall indemnify and hold Executive
harmless to the maximum extent permitted by Section 2-418 of the Maryland
General Corporations Law (the "MGCL") or its successor statute.
21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
22. SUCCESSOR SECTIONS. References herein to sections or rules of
the Code or the MGCL shall be deemed to include any successor sections or
rules.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Executive has hereunto
signed this Agreement, as of the date first above written.
TIS MORTGAGE INVESTMENT COMPANY
By: / s / John D. Boyce
-------------------------------------
John D. Boyce, Chairman
Compensation Committee
Agreed and Accepted by:
/s/ Lorraine O. Legg
- ---------------------------
Lorraine O. Legg
Exhibit 10.2
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT ("Agreement"), effective as of the first day
of July, 1996, is entered into by and between John E. Castello
("Executive") and TIS Mortgage Investment Company, a Maryland corporation
(the "Company").
The Company desires to establish its right to the continued services
of the Executive in the capacity described below, on the terms and
conditions and subject to the rights of termination hereinafter set forth,
and the Executive is willing to accept such employment on such terms and
conditions.
In consideration of the mutual agreements hereinafter set forth, the
Executive and the Company have agreed and do hereby agree as follows:
1. EMPLOYMENT AS EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER OF THE COMPANY. The Company does hereby employ, engage and hire the
Executive as Executive Vice President and Chief Financial Officer of the
Company, and the Executive does hereby accept and agree to such hiring,
engagement, and employment. The Executive's duties as Executive Vice
President and Chief Financial Officer shall be such executive and
managerial duties as the Board of Directors of the Company shall from time
to time prescribe and as provided in the Bylaws of the Company, as amended
from time to time; provided such executive and managerial duties are
consistent with the powers and duties of the senior executive of the
Company. The Executive shall devote such time, energy and skill to the
performance of his duties for the Company and for the benefit of the
Company as may be necessary or required for the effective conduct and
operation of the Company's business. Furthermore, the Executive shall
exercise due diligence and care in the performance of his duties to the
Company under this Agreement.
2. TERM OF AGREEMENT. The term ("Term") of this Agreement shall
commence on July 1, 1996 (the "Effective Date"), and shall continue through
the second anniversary of the Effective Date; provided, however, that on
the first and each succeeding anniversary of the Effective Date the Term
shall be automatically extended for one additional year, unless not later
than three months prior to any such anniversary, either party shall have
given written notice to the other that it does not wish to extend the Term
of the Agreement. The Executive shall commence the rendering of personal
services under this Agreement on the Effective Date.
3. COMPENSATION.
(a) BASE SALARY. Commencing on the Effective Date, the Company
shall pay the Executive, and the Executive agrees to accept from the
Company, in payment for his services to the Company a base salary of
$80,000 per annum ("Base Salary"), payable in equal biweekly installments
or at such other time or times as the Executive and Company shall agree.
The per annum amount of the Executive's Base Salary shall not be decreased
at any time during the Term of the Agreement from the highest per annum
amount theretofore paid.
(b) INCENTIVE BONUS. The Executive shall be eligible to receive
an annual incentive performance bonus (the "Incentive Bonus") based upon a
percentage of his Base Salary (except that the initial Incentive Bonus
shall be computed for the period commencing on the Effective Date and
ending on December 31, 1996, with reference to the Base Salary paid during
that period). Except as provided in Section 7, any Incentive Bonus awarded
to the Executive shall be payable in the amount, in the manner, and at the
time determined by the Company's Board of Directors in its sole and
absolute discretion.
(c) ANNUAL REVIEW. The Board of Directors shall, at least
annually, review the Executive's entire compensation package to determine
whether it continues to meet the Company's compensation objectives. Such
annual review will include a determination of (i) whether to increase the
Base Salary and (ii) the discretionary Incentive Bonus to be awarded in
accordance with Section 3(b).
4. FRINGE BENEFITS. The Executive shall be entitled to participate
in any benefit programs adopted from time to time by the Company for the
benefit of its executive employees, and the Executive shall be entitled to
receive such other fringe benefits as may be granted to him from time to
time by the Company's Board of Directors.
(a) BENEFIT PLANS. The Executive shall be entitled to
participate in any benefit plans relating to stock options, stock
purchases, pension, thrift, profit sharing, life insurance, disability,
medical coverage, education, or other retirement or employee benefits
available to other executive employees of the Company, subject to any
restrictions (including waiting periods) specified in such plans. No such
plans are currently in effect but, from the Effective Date and during the
term of this Agreement, the Company shall pay one-half (1/2) of the cost of
the Executive's present medical and disability insurance coverage from
Employers Health Insurance Company and UNUM Life Insurance Company of
America, respectively, or such other plans as shall be reasonably approved
by the Board and the Executive.
(b) VACATION. The Executive shall be entitled to (i) two (2)
weeks of paid vacation per calendar year for the first four (4) years of
service to the Company commencing on the Effective Date, and (ii) three (3)
weeks of paid vacation per calendar year after four (4) years of service to
the Company, with such vacation to be scheduled and taken in accordance
with the Company's standard vacation policies. The Executive shall be
entitled to such additional number of weeks of paid vacation per calendar
year as may be approved by the Board of Directors of the Company after
review of industry standards.
5. BUSINESS EXPENSES. The Company shall reimburse the Executive for
any and all necessary, customary and usual expenses, properly receipted in
accordance with Company policies, incurred by the Executive on behalf of
the Company.
6. TERMINATION OF EXECUTIVE'S EMPLOYMENT.
(a) DEATH. If the Executive dies while employed by the Company,
his employment shall immediately terminate. The Company's obligation to
pay the Executive's Base Salary shall cease as of the date of Executive's
death. Thereafter, Executive's beneficiaries or his estate shall receive
benefits in accordance with the Company's retirement, insurance and other
applicable programs and plans then in effect.
(b) DISABILITY. (i) If, as a result of the Executive's
incapacity due to physical or mental illness ("Disability"), Executive
shall have been absent from the full-time performance of his duties with
the Company for six (6) consecutive months, and, within thirty (30) days
after written notice is provided to him by the Company, he shall not have
returned to the full-time performance of his duties, the Executive's
employment under this Agreement may be terminated by the Company for
Disability. During any period prior to such termination during which the
Executive is absent from the full-time performance of his duties with the
Company due to Disability, the Company shall continue to pay the Executive
his Base Salary at the rate in effect at the commencement of such period of
Disability. Subsequent to such termination, the Executive's benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs.
(ii) If, however, as a result of the Executive's partial
incapacity due to physical or mental illness in which period Executive
shall not have been absent from his duties for six consecutive months and
shall have returned to work on a full-time basis but is not able to perform
at the same level as when hired and/or is not able to perform the same
functions originally hired for ("Partial Disability"), the Company shall
make reasonable efforts to accommodate the Executive's Partial Disability
by modifying his job description appropriately, together with a
commensurate adjustment in compensation; provided, however, the Company
shall be required to so continue the employment of the Executive in the
event of a Partial Disability of the Executive only if the Company
determines, in its sole discretion, that it can create a position for which
the Executive would be suited and that would be economically advantageous
to the Company.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may
terminate the Executive's employment under this Agreement for "Cause," at
any time prior to expiration of the Term of the Agreement without any
advance written notice, and the Company's obligation to pay the Executive's
Base Salary, any Incentive Bonus and fringe benefits shall cease as of the
termination date. As used herein, the term "Cause" shall mean (i) the
Executive's material breach of this Agreement, including without limitation
the failure to substantially perform the reasonable and lawful duties of
his position for the Company, which breach shall continue for 30 days after
notice thereof by the Company to the Executive, (ii) acts or omissions
constituting negligence, recklessness or willful misconduct on the part of
the Executive in respect of his fiduciary obligations or otherwise relating
to the business of the Company, or (iii) the Executive's conviction for
fraud, misappropriation or embezzlement.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive
shall have the right to terminate this Agreement for "Good Reason." As
used herein, the term "Good Reason" shall mean the occurrence, without the
Executive's express written consent, of any one or more of the following
events:
(i) A reduction in title of the Executive or the
assignment of duties to the Executive not consistent with those of a senior
executive of the Company, except in connection with the Company's
termination of the Executive's employment for Cause pursuant to Section
6(c) or as otherwise expressly contemplated herein;
(ii) The Company's material breach of any of the provisions
of this Agreement, including, but not limited to, a reduction by the
Company in the Executive's Base Salary in effect as of the Effective Date,
or as the same may be increased as provided herein; or a change in the
conditions of the Executive's employment (e.g., including, without
limitation, a reduction in any benefit plans in effect as of the Effective
Date or the benefits thereunder, etc.);
(iii) The relocation of the Company's principal executive
offices to a location more than 25 miles from its location as of the
Effective Date or the Company's requiring the Executive to be based
anywhere other than the Company's principal executive offices, except for
required travel on the Company's business to the extent necessary to meet
the standard set forth in the last two sentences of Section 1; or
(iv) A Change in Control as defined in Section 8 below.
The Executive agrees to provide the Company with thirty (30) days'
prior written notice of any termination for Good Reason.
(e) TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON. The
Executive may at any time during the Term terminate his employment
hereunder for any reason or no reason by giving the Company notice in
writing not less than one hundred twenty (120) days in advance of the
effective date of such termination. The Executive shall have no further
obligations to the Company after the effective date of termination, as set
forth in the notice. Notwithstanding the foregoing, in the event any
"person" (as defined in Section 8 below) begins a tender or exchange offer,
circulates a proxy to shareholders or takes other steps to effect a Change
in Control, the Executive agrees that he will not voluntarily leave the
employ of the Company, and will render services to the Company commensurate
with his position, until such person has abandoned or terminated efforts to
effect a Change in Control or until a Change in Control has occurred. In
the event of a termination by the Executive under this paragraph, the
Company will pay only the portion of Base Salary or previously awarded
Incentive Bonus unpaid as of the termination date. Fringe benefits which
have accrued and/or vested on the termination date will continue in effect
according to their terms, but no additional accrual or vesting will take
place.
7. COMPENSATION UPON TERMINATION BY THE COMPANY OTHER THAN FOR
CAUSE, OR BY THE EXECUTIVE FOR GOOD REASON. If the Executive's employment
shall be terminated (i) by the Company other than for Cause, or (ii) by the
Executive for Good Reason, the Executive shall be entitled to the following
benefits:
(a) PAYMENT OF UNPAID BASE SALARY. The Company shall
immediately pay the Executive any portion of the Executive's Base Salary or
previously awarded Incentive Bonus not paid prior to the termination date.
(b) SEVERANCE PAYMENT. The Company shall pay the Executive an
amount (the "Severance Amount") equal to 299% of the higher of (i) the
Executive's combined Base Salary and actual Incentive Bonus compensation
for the preceding fiscal year (annualized if a full fiscal year has not
been completed during the Term) or (ii) the average for the three preceding
years of the Executive's combined actual Base Salary and Incentive Bonus;
provided, however, that the Severance Amount shall not be less than
$283,100. The Severance Amount shall be payable 50% within five (5) days
after the termination date and the remaining 50% shall be payable in twelve
(12) equal consecutive monthly installments beginning on the first day of
the month following the termination date.
(c) EXCISE TAX. Notwithstanding anything to the contrary in
this Section 7, if any of the payments or other compensation to be made to
the Executive pursuant this Section 7 are determined to be "excess
parachute payments" as defined in Section 280G of the Internal Revenue Code
of 1986, as amended, (the "Code"), then the amount of such payments or
other compensation shall be reduced to the largest amount which would not
constitute "excess parachute payments" as so defined.
(d) IMMEDIATE VESTING OF STOCK OPTIONS. The Company shall take
all appropriate action to ensure that all stock options on the Company's
stock owned by the Executive now or in the future and which have not been
exercised prior to the termination date become immediately exercisable by
the Executive to the fullest extent permissible by the 1995 Stock Option
Plan (the "Plan"), as it may be amended from time to time, whether or not
the right to exercise such stock options would otherwise then be vested in
the Executive.
(e) CONTINUATION OF FRINGE BENEFITS. From and after termination
of the Executive's employment, the Company shall continue to provide the
Executive with any and all Fringe Benefits as if the Executive's employment
under the Agreement had not been terminated until the earlier to occur of
(i) such time as the Executive finds full-time employment or (ii)
completion of the Term remaining at the time of termination.
Notwithstanding the immediately preceding sentence, if, as the result of
termination of the Executive's employment, the Executive and/or his
otherwise eligible dependents or beneficiaries shall become ineligible for
benefits under any one or more of the Company's benefit plans or the cost
of providing such benefits exceeds 200% of the cost of providing such
benefits to other members of senior management, the Company, at the
Company's option, shall (i) continue to provide the Executive and his
eligible dependents or beneficiaries with benefits at a level at least
equivalent to the level of benefits for which the Executive and his
dependents and beneficiaries were eligible under such plans immediately
prior to the termination date or (ii) for any Fringe Benefit not so
provided, the Company shall pay the Executive 200% of the cost of providing
such Fringe Benefit to other members of senior management.
(f) NO MITIGATION REQUIRED; NO OTHER ENTITLEMENT TO BENEFITS
UNDER AGREEMENT. The Executive shall not be required in any way to
mitigate the amount of any payment provided for in this Section 7,
including, but not limited to, by seeking other employment, nor shall the
amount of any payment provided for in this Section 7 be reduced by any
compensation earned by the Executive as the result of employment with
another employer after the termination date of employment, or otherwise.
Except as set forth in this Section 7, following a termination governed by
this Section 7, the Executive shall not be entitled to any other
compensation or benefits set forth in this Agreement, except as may be
separately negotiated by the parties and approved by the Board of Directors
of the Company in writing in conjunction with the termination of
Executive's employment under this Section 7.
8. CHANGE IN CONTROL. A "Change in Control" shall be deemed to
have occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(a) Any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
(other than the Company; any trustee or other fiduciary holding securities
under an employee benefit plan of the Company; or any company owned,
directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of the stock of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company (not including
in the securities beneficially owned by such person any securities acquired
directly from the Company or from a transferor in a transaction expressly
approved or consented to by the a majority of the Continuing Directors
(defined below)) representing more than 20% of the combined voting power of
the Company's then outstanding securities; or
(b) At any time the Continuing Directors cease for any reason to
constitute a majority of the Board of Directors. "Continuing Directors"
shall mean individuals who, on the date of this Agreement, constitute the
Board of Directors and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect a
transaction described in clause (a), (c) or (d) of this section), whose
election by the Board of Directors or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date
of this Agreement or whose election or nomination for election was
previously so approved, or
(c) The shareholders of the Company approve a merger or
consolidation of the Company with any other entity, other than (i) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 75% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no person or group acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(d) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets
or earning power.
9. DISPUTE RELATING TO EXECUTIVE'S TERMINATION OF EMPLOYMENT FOR
GOOD REASON. If the Executive resigns his employment with the Company
alleging in good faith as the basis for such resignation any of the "Good
Reasons" specified in Section 6(d), and if the Company then disputes the
Executive's right to the payment of benefits under Section 7, the Company
shall continue to pay the Executive the full compensation (including, but
not limited to, his Base Salary) in effect at the date the Executive
provides notice of such resignation, and the Company shall continue the
Executive as a participant in all compensation, benefit and insurance plans
in which the Executive was then a participant, until the earlier of the
expiration of the Term or the date the dispute is finally resolved, either
by mutual written agreement of the parties or by decree of a court of
competent jurisdiction which is not appealable or with respect to which the
time for appeal has expired and no appeal has been perfected. For the
purposes of this Section 9, the Company shall bear the burden of proving
that the grounds for the Executive's resignation do not fall within the
scope of Section 6(d), and there shall be a rebuttable presumption that the
Executive alleged such grounds in good faith.
10. NONCOMPETITION PROVISIONS.
(a) NONCOMPETITION. The Executive agrees that during the Term
of this Agreement prior to any termination of his employment hereunder and
for a period of one year following the occurrence of any event entitling
the Executive to benefit payments provided under subparagraphs (a)-(e) of
Section 7, provided the Company makes all such payments when due according
to the provisions of Section 7, he will not, directly or indirectly,
without the prior written consent of the Company, manage, operate, join,
control, participate in, or be connected as a stockholder (other than as a
holder of ten percent (10%) or less of a class of shares publicly traded on
a stock exchange or on NASDAQ), partner, or other equity holder with, or as
an officer, director or employee of, any mortgage real estate investment
trust or multi-family residential real estate investment trust whose
business strategy is competitive with that of the Company, as determined by
a majority of the Company's independent directors ("Competing REIT");
provided, however, that a REIT shall not be deemed a "Competing REIT"
solely as a result of such REIT's purchase or sale of securities issued by
the Government National Mortgage Association, Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation for the purpose
of meeting income and asset tests required to maintain REIT status.
Notwithstanding the fact that consent of the Board of Directors shall not
be required for the Executive to become affiliated with entities other than
Competing REITS, it is expressly agreed that the Executive shall give
prompt written notice to the Board of Directors upon becoming a director,
officer, employee or more than ten percent (10%) shareholder, directly or
indirectly, of entities other than the Company, except for non-profit and
charitable organizations. It is further expressly agreed that the Company
will or would suffer irreparable injury if the Executive were to compete
with the Company or any subsidiary or affiliate of the Company in violation
of this Agreement and that the Company would by reason of such competition
be entitled to injunctive relief in a court of appropriate jurisdiction,
and the Executive further consents and stipulates to the entry of such
injunctive relief in such a court prohibiting the Executive from competing
with the Company or any subsidiary or affiliate of the Company, in the
areas of business set forth above, in violation of this Agreement. It is
further expressly agreed that the Executive's interest in and employment by
(i) any entity disclosed to the Board in writing prior to the date of this
Agreement, and (ii) TIS Financial Services, Inc. shall not be deemed to
violate any provisions of this Section, regardless of the scope of the
Executive's activities with such firm; provided, however, that the
Executive shall not in such capacity provide services, directly or
indirectly, to any Competing REIT without written approval of the Board of
Directors.
(b) RIGHT TO COMPANY MATERIALS. The Executive agrees that all
styles, designs, lists, materials, books, files, reports, correspondence,
records, and other documents ("Company Materials") used, prepared, or made
available to the Executive shall be and shall remain the property of the
Company. Upon the termination of employment or the expiration of this
Agreement, all Company Materials shall be returned immediately to the
Company, and the Executive shall not make or retain any copies thereof.
(c) SOLICITING EXECUTIVES. The Executive promises and agrees
that he will not directly or indirectly solicit any of the Company
employees to work for any Competing REIT.
(d) DUTY OF LOYALTY. The Executive agrees, in accordance with
Maryland law, to first offer to the Company corporate opportunities learned
of solely as a result of his service as an officer and director of the
Company.
11. RESTRICTIONS ON OTHER MANAGEMENT. Until such time as the
Executive's employment pursuant to this Agreement is terminated, the
Company agrees that it shall not enter into a separate management agreement
or employment, consulting or other management arrangement with any other
person, group or entity to perform all or a substantial portion of the
duties performed by the Executive unless the Executive gives his written
consent to such an agreement or arrangement.
12. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by fax or first class
mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three (3) days after mailing or twenty-four
(24) hours after transmission of a fax to the respective persons named
below:
If to Company: TIS Mortgage Investment Company
655 Montgomery Street
Suite 800
San Francisco, CA 94111-2628
Phone: (415) 393-8000
Fax: (415) 393-8006
Attention: Board of Directors
with a copy to
(which shall not
constitute notice): M. Greg Allio, Esq.
Farella, Braun & Martel
235 Montgomery Street, 30th Floor
San Francisco, CA 94104
Phone: (415) 954-4400
Fax: (415) 954-4480
If to Executive: John E. Castello
Executive Vice President
TIS Mortgage Investment Company
655 Montgomery Street
Suite 800
San Francisco, CA 94111-2628
Phone: (415) 393-8000
Fax: (415) 393-8006
Either party may change such party's address for notices by
notice duty given pursuant hereto.
13. ATTORNEYS' FEES. In the event judicial determination is
necessary of any dispute arising as to the parties' rights and obligations
hereunder, each party shall have the right, in addition to any other relief
granted by the court, to attorneys' fees based on a determination by the
court of the extent to which each party has prevailed as to the material
issues raised in determination of the dispute.
14. TERMINATION OF PRIOR AGREEMENT. This Agreement terminates and
supersedes any and all prior agreements and understandings between the
parties with respect to employment or with respect to the compensation of
the Executive by the Company.
15. ASSIGNMENT; SUCCESSORS. This Agreement is personal in its nature
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder;
provided that, in the event of the merger, consolidation, transfer, or sale
of all or substantially all of the assets of the Company with or to any
other individual or entity, this Agreement shall, subject to the provisions
hereof, be binding upon and inure to the benefit of such successor and such
successor shall discharge and perform all the promises, covenants, duties,
and obligations of the Company hereunder.
16. GOVERNING LAW. This Agreement and the legal relations thus
created between the parties hereto shall be governed by and construed under
and in accordance with the laws of the State of California.
17. ENTIRE AGREEMENT; HEADINGS. This Agreement embodies the entire
agreement of the parties respecting the matters within its scope and may be
modified only in writing. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
18. WAIVER, MODIFICATION. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed
a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times. This
Agreement shall not be modified in any respect except by a writing executed
by each party hereto.
19. SEVERABILITY. In the event that a court of competent
jurisdiction determines that any portion of this Agreement is in violation
of any statute or public policy, only the portions of this Agreement that
violate such statute or public policy shall be stricken. All portions of
this Agreement that do not violate any statute or public policy shall
continue in full force and effect. Further, any court order striking any
portion of this Agreement shall modify the stricken terms as narrowly as
possible to give as much effect as possible to the intentions of the
parties under this Agreement.
20. INDEMNIFICATION. The Company shall indemnify and hold Executive
harmless to the maximum extent permitted by Section 2-418 of the Maryland
General Corporations Law (the "MGCL") or its successor statute.
21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
22. SUCCESSOR SECTIONS. References herein to sections or rules of
the Code or the MGCL shall be deemed to include any successor sections or
rules.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Executive has hereunto
signed this Agreement, as of the date first above written.
TIS MORTGAGE INVESTMENT COMPANY
By: /s/ John D. Boyce
-------------------------
John D. Boyce, Chairman
Compensation Committee
Agreed and Accepted by:
/s/ John E. Castello
- ----------------------
John E. Castello
Exhibit 10.3
FACILITIES AND EXPENSE SHARING AGREEMENT
Facilities and Expense Sharing Agreement (the "Agreement"), dated as
of the 1st day of July, 1996, by and between TIS Mortgage Investment
Company, a Maryland corporation (the "Company") and TIS Financial Services,
Inc., a Delaware corporation ("TISFIS");
WITNESSETH:
WHEREAS, the Company expects to qualify for the tax benefits accorded
by Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, the Company and TISFIS desire to share executive and
administrative personnel and facilities and share the expenses incurred
therewith pro rata in relation to the extent each of the Company and TISFIS
avail themselves of such personnel and facilities;
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement, the following terms, unless the
context otherwise requires, shall have the following meaning:
(a) "Affiliate" of another Person means any Person directly or
indirectly owning, controlling or holding with power to vote, more than 5%
of the outstanding voting securities of such other Person; any Person 5% or
more of whose outstanding voting securities are directly or indirectly
owned, controlled or held with power to vote by such other Person any
Person directly or indirectly controlling, controlled by or under common
control with, such other Person; and any officer, director, partner or
employee of such other Person.
(b) "Agreement" means this Facilities and Expense Sharing Agreement,
as amended from time to time.
(c) "Effective Date" means July 1, 1996.
(d) "Person" means a natural person, corporation, partnership,
association, trust (including any beneficiary thereof), company, joint
venture, joint stock company, unincorporated organization or other entity.
2. SHARING OF FACILITIES AND EXPENSES.
(a) Sharing of Administrative Services and Facilities.
Commencing on the Effective Date and until such time as (i) TISFIS and the
Company no longer continue to share office space or (ii) this Agreement is
otherwise terminated pursuant to Section 5 hereof, the parties agree to
share office space, office equipment (including computer equipment),
administrative and other personnel and ancillary services for the ongoing
operations of TISFIS and the Company.
(b) Administrative Services and Facilities Expenses. Each of
TISFIS and the Company may pay for, and shall be entitled to reimbursement
from the other party on a pro rata basis for, all of the following fees and
expenses incurred in connection with the sharing of administrative services
and facilities as set forth in Section 2(a) hereof:
(i) Rent (including related local property taxes and
property insurance costs), telephone, utilities, office
furniture, equipment and machinery (including computers, to the
extent utilized) and other office expenses, except to the extent
any of such expenses relate to an office or office facilities
maintained by one party hereto separate from the office of the
other party hereto;
(ii) Bookkeeping fees and expenses, including any cost
of computer services related thereto;
(iii) Miscellaneous administrative and other expenses,
including administrative personnel expenses, ancillary services
expenses and certain non-administrative personnel expenses; and
(iv) Costs incurred in connection with actual or
threatened litigation with respect to the shared facilities
and/or services, including all losses, claims, damages,
judgments, liabilities and expenses (including the reasonable
fees and expenses of counsel and other expenses in connection
with investigating, defending or settling any action or claim);
provided, however, neither party shall be responsible for such
costs arising from any matter which relates (i) in the case of
the Company, solely to TISFIS or third parties not authorized by
the Company, or (ii), in the case of TISFIS, solely to the
Company or a third-party authorized solely by the Company.
As used herein, the sharing of an expense on a pro rata basis shall
mean the division of such shared expense based upon the relative benefit
received by each party in accordance with the amount of space utilized and
the time utilized, if applicable, or the relative amount of time each such
resource is used, or such other allocation as may be agreed upon by the
parties. Expenses for office space allocated to officers or employees who
are employed or shared by the Company and TISFIS shall be allocated based
on the proportion of such officers' or employees' time spent in connection
with providing services to such party. Any usage of space, equipment or
other asset by a party other than the Company shall be allocated to TISFIS
unless such asset was used, or work was performed, for the benefit of or at
the request of the Company. TISFIS and the Company shall mutually agree
upon a fair methodology for determining the allocation of the expenses
pursuant to this Agreement. To the extent that TISFIS and the Company
cannot promptly resolve an issue involving allocating past or future
expenses, the disputed matter shall be reviewed by (i) the directors of the
Company who are not directors, officers, employees or agents of TISFIS or
officers or employees of the Company and (ii) the directors of TISFIS. If
such directors cannot promptly resolve such dispute, the dispute shall be
submitted to binding arbitration in a manner agreed to by such directors of
each party hereto.
(c) Unless otherwise agreed to by the parties hereto, all such fees
and expenses incurred by a party hereto shall be paid by the other party
monthly upon receipt of an invoice itemizing the amount and nature of such
fees and expenses to be reimbursed. Invoices shall be paid within thirty
days of receipt thereof. A party shall not be required to pay any amount
on any such invoice to the extent that any dispute exists as to such amount
until the resolution of such dispute.
(d) All expenses of the Company related to the ongoing operations of
the Company (other than those listed in item (b) above) shall not be paid
by TISFIS, but rather shall be paid directly by the Company.
(e) All expenses of TISFIS related to the ongoing operations of
TISFIS (other than those listed in item (b) above) shall not be paid by the
Company, but rather shall be paid directly by TISFIS.
(f) Nothing contained in this Agreement shall prevent TISFIS or the
Company or any of their Affiliates from engaging in other businesses or
from rendering any other services of any kind to any Person.
Notwithstanding the fact that consent of either party shall not be required
for the other party to become affiliated with other Persons, it is
expressly agreed that TISFIS shall give prompt written notice to the
Company prior to entering agreements with, performing services of any kind
for, or allowing any of its employees to serve as directors, officers or
employees of any residential mortgage real estate investment trust or multi-
family residential real estate investment trust, except for non-profit and
charitable organizations and entities for which TISFIS is performing
services on the date of this Agreement as disclosed in writing. Directors,
officers, employees and agents of TISFIS or the Company, or Affiliates of
the same, may serve as directors, officers, employees, agents, nominees or
signatories for the Company and TISFIS to the extent permitted by their
respective By-Laws, as from time to time amended. When executing documents
or otherwise acting in such capacities for the Company or TISFIS, such
Person shall use their respective titles in the Company or TISFIS, as the
case may be.
3. LIMITS OF RESPONSIBILITY. TISFIS assumes no responsibility under
this Agreement other than to render the services called for hereunder in
good faith and to share the costs of facilities and services set forth in
Section 2 hereof. The Company assumes no responsibility under this
Agreement other than to reimburse TISFIS for the services called for
hereunder in good faith and to share the costs of facilities and services
set forth in Section 2 hereof.
TISFIS and its directors, officers, stockholders and employees will
not be liable to the Company, the directors of the Company or their
stockholders for any acts or omissions by TISFIS, its directors, officers,
stockholders or employees under or in connection with this Agreement,
except by reason of acts constituting bad faith, willful misconduct, gross
negligence or reckless disregard of their duties. The Company and its
directors, officers, stockholders and employees will not be liable to
TISFIS, the directors TISFIS or their stockholders for any acts or
omissions by the Company, its directors, officers, stockholders or
employees under or in connection with this Agreement, except by reason of
acts constituting bad faith, willful misconduct, gross negligence or
reckless disregard of their duties.
4. NO JOINT VENTURE. The Company and TISFIS are not partners or
joint venturers with each other and nothing herein shall be construed to
make them such partners or joint venturers or impose any liability as such
on either of them.
5. TERM, TERMINATION.
(a) This Agreement shall commence on the Effective Date and shall
continue in full force and effect until (i) terminated by either party upon
30 days' prior written notice to the other or (ii) such time as the parties
hereto no longer continue to share office space.
(b) If this Agreement is terminated pursuant to this Section 5, such
termination shall be without any further liability or obligation of either
party to the other, except as provided in Section 7 of this Agreement.
6. ASSIGNMENTS. Neither party may assign or transfer its rights or
obligations under this Agreement without the prior written consent of the
other party.
7. ACTION UPON TERMINATION.
(a) From and after the effective date of termination of this
Agreement pursuant to Section 5 hereof, no party hereto shall be entitled
to reimbursement for further expenses incurred under Section 1 hereof, but
shall be paid all reimbursable expenses accruing to the date of termination
in accordance with the provisions of Section 1 hereof.
(b) Upon termination pursuant to Section 5 hereof, each of TISFIS and
the Company shall (i) deliver to each other a full accounting, including a
statement showing all reimbursable expenses incurred by it covering the
period following the date of the last accounting furnished to such other
party, and (ii) deliver to the other party within thirty days of such
accounting all monies and/or other property and documents of the other
party then in the custody of such party.
(c) Upon termination of this Agreement pursuant to Section 5 hereof,
each party hereto shall be entitled to remove any property owned or leased
by such party from the control of the other party, and no party hereto
shall have any rights to the use of any property owned or leased by such
other party.
8. REPRESENTATIONS AND WARRANTIES.
(a) The Company hereby represents and warrants to TISFIS as follows:
(i) The Company is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, has the corporate power to own its assets and to
transact the business in which it is now engaged and is duly
qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such
qualification, except for failures to be so qualified, authorized
or licensed that could not in the aggregate have a material
adverse effect on the business operations, assets or financial
condition of the Company.
(ii) The Company has the corporate power and authority to
execute, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action
to authorize this Agreement on the terms and conditions hereof
and the execution, delivery and performance of this Agreement and
all obligations required hereunder. No consent of any other
person including stockholders and creditors of the Company, and
no license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with,
any governmental authority is required by the Company in
connection with this Agreement or the execution, delivery,
performance, validity or enforceability of this Agreement and all
obligations required hereunder. This Agreement has been, and
each instrument or document required hereunder will be, executed
and delivered by a duly authorized agent of the Company, and this
Agreement constitutes, and each instrument or document required
hereunder when executed and delivered hereunder will constitute,
the legally valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
(iii) The execution, delivery and performance of this
Agreement and the documents or instruments required hereunder,
will not violate any provision of any existing law or regulation
binding on the Company, or any order, judgment, award or decree
of any court, arbitrator or governmental authority binding on the
Company, or the Governing Instruments of, or any securities
issued by the Company or of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which
the Company is a party or by which the Company or any of its
assets may be bound, the violation of which would have a material
adverse effect on the business operations, assets or financial
condition of the Company and its subsidiaries, taken as a whole,
and will not result in, or require, the creation or imposition of
any lien on any of its property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract
or other agreement, instrument or undertaking. The execution,
delivery and performance of this Agreement shall not violate the
provisions of any lease or agreement relating to the facilities
to be shared pursuant to this Agreement.
(b) TISFIS hereby represents and warrants to the Company as follows:
(i) TISFIS is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power to own its assets and to transact the
business in which it is now engaged and is duly qualified as a
foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except for
failures to be so qualified, authorized or licensed that could
not in the aggregate have a material adverse effect on the
business operations, assets or financial condition of TISFIS.
(ii) TISFIS has the corporate power and authority to
execute, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action
to authorize this Agreement on the terms and conditions hereof
and the execution, delivery and performance of this Agreement and
all obligations required hereunder. No consent of any other
person including stockholders and creditors of TISFIS, and no
license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with,
any governmental authority is required by TISFIS in connection
with this Agreement or the execution, delivery, performance,
validity or enforceability of this Agreement and all obligations
required hereunder. This Agreement has been, and each instrument
or document required hereunder will be, executed and delivered by
a duly authorized officer of TISFIS, and this Agreement
constitutes, and each instrument or document required hereunder
when executed and delivered hereunder will constitute, the
legally valid and binding obligation of TISFIS enforceable
against TISFIS in accordance with its terms.
(iii) The execution, delivery and performance of this
Agreement and the documents or instruments required hereunder,
will not violate any provision of any existing law or regulation
binding on TISFIS, or any order, judgment, award or decree of any
court, arbitrator or governmental authority binding on TISFIS, or
the certificate of incorporation or by-laws of, or any securities
issued by TISFIS or of any mortgage, indenture, lease, contract
or other agreement, instrument or undertaking to which TISFIS is
a party or by which TISFIS or any of its assets may be bound, the
violation of which would have a material adverse effect on the
business operations, assets or financial condition of TISFIS and
its subsidiaries, taken as a whole, and will not result in, or
require, the creation or imposition of any lien on any of its
property, assets or revenues pursuant to the provisions of any
such mortgage, indenture, lease, contract or other agreement,
instrument or undertaking. The execution, delivery and
performance of this Agreement shall not violate the provisions of
any lease or agreement relating to the facilities to be shared
pursuant to this Agreement.
9. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by fax or first class
mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three (3) days after mailing or twenty-four
(24) hours after transmission of a fax to the respective Persons named
below:
(a) If to TISFIS:
TIS Financial Services, Inc.
655 Montgomery Street
Suite 800
San Francisco, CA 94111-2628
Phone: (415) 393-8000
FAX: (415) 393-8006
(b) If to the Company:
TIS Mortgage Investment Company
655 Montgomery Street
Suite 800
San Francisco, CA 94111-2628
Attention: Board of Directors
Phone: (415) 393-8000
FAX: (415) 393-8006
with a copy, given in the manner prescribed above, to each non-party
member of its Board of Directors.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives,
successors and assigns as provided herein.
10. ATTORNEYS' FEES. In the event judicial determination is
necessary of any dispute arising as to the parties' rights and obligations
hereunder, each party shall have the right, in addition to any other relief
granted by the court, to attorneys' fees based on a determination by the
court of the extent to which each party has prevailed as to the material
issues raised in determination of the dispute.
11. ENTIRE AGREEMENT, HEADINGS. This Agreement embodies the entire
agreement of the parties respecting the matters within its scope and may be
modified only in writing. Section headings in this Agreement are included
here in for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
12. GOVERNING LAW. This Agreement and the legal relations thus
created between the parties hereto shall be governed and construed under
and in accordance with the laws of the State of California.
13. WAIVER, MODIFICATION. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed
a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times. This
Agreement shall not be modified in any respect except by a writing executed
by each party hereto.
14. COSTS AND EXPENSES. Each party hereto shall bear its own costs
and expenses incurred in connection with the negotiation and preparation of
and the closing under this Agreement, and all matters incident thereto.
15. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
16. SEVERABILITY. In the event that a court of competent
jurisdiction determines that any portion of this Agreement is in violation
of any statute or public policy, only the portions of this Agreement that
violate such statute or public policy shall be stricken. All portions of
this Agreement that do not violate any statute or public policy shall
continue in full force and effect. Further, any court order striking any
portion of this Agreement shall modify the stricken terms as narrowly as
possible to give as much effect as possible to the intentions of the
parties under this Agreement.
17. GENDER. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires.
18. CONFIDENTIALITY. Each party hereto agrees to keep confidential
all information obtained from the other party hereto in the performance of
this Agreement and shall not use such information for its own benefit or
for the benefit of others, except to the extent that such information
(i) was known by the party when received, (ii) is or hereafter becomes
lawfully obtainable from other public sources or (iii) is required or
necessary to be disclosed to a governmental entity.
19. NO IMPAIRMENT. The rights and obligations of each party hereto
shall not impair the rights and obligations of the parties hereto under any
other agreement to which the Company and TISFIS are parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
TIS FINANCIAL SERVICES, INC.
By: /s/ Lorraine O. Legg
----------------------
Lorraine O. Legg
President
TIS MORTGAGE INVESTMENT COMPANY
By: /s/ John D. Boyce
------------------------
John D. Boyce, Chairman
Compensation Committee
Exhibit 99.1
(NYSE: TIS)
CONTACT: John E. Castello
(415) 393-8000
FOR IMMEDIATE RELEASE
TIS MORTGAGE INVESTMENT COMPANY TO BE SELF- ADMINISTERED
SAN FRANCISCO, CALIFORNIA, June 27, 1996 -- TIS Mortgage
Investment Company and TIS Financial Services, Inc. announced
today that as of July 1, 1996, TIS will be a self-administered
Real Estate Investment Trust and will no longer be managed by TIS
Financial Services, Inc.
The Company also announced today that Patricia M. Howe has
elected to resign her office as Chairman of the Board, effective
June 30, 1996, but will continue to serve the Company as a
director. The Board regretfully accepted Ms. Howe's resignation
and commended her for her past leadership as the Company's
Chairman. Lorraine O. Legg was elected to succeed Ms. Howe as
Chairman of the Board, and Ms. Legg stated "I am pleased that
Ms. Howe will remain a director of the Company to provide
continuing advice and counsel."
In connection with becoming self-administered, the Company
will enter into a three-year employment agreement with Ms. Legg,
who will serve as the Company's Chairman and President, a two-
year employment agreement with John E. Castello, who will serve
as Executive Vice President and Chief Financial Officer, and an
expense sharing agreement with TIS Financial Services, Inc.
The Board of Directors also announced a technical amendment
to the Company's By-Laws to permit the Company to set the term of
its executives' employment according to the terms of approved
employment contracts. "In deciding on this course of action, the
Board evaluated various alternatives, and the conversion to self-
administration is expected to result in cost savings and provide
other advantages over being managed by a third-party manager,"
said Ms. Legg.
TIS Mortgage Investment Company is a San Francisco-based
Real Estate Investment Trust (REIT).
