Document:

Exhibit 10.04

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”),

effective as of September 1, 2002, is entered into between American Spectrum

Realty, Inc., a Maryland corporation (the “Company”), and Thomas N.

Thurber (“Executive”).

 

Recitals

 

A.            The

Company is a corporation intended to be qualified and to operate as a real

estate investment trust under the Internal Revenue Code of 1986, as amended.

 

B.            The Company wishes

to employ Executive and Executive wishes to be employed by the Company, on the

terms and conditions set forth below.

 

THEREFORE, the parties agree as follows:

 

1.             Employment

Duties.  During the Term (as defined

in paragraph 2 below), the Company will initially employ Executive as its

Senior Vice President Corporate Development. Executive will devote

substantially all of his business time and attention to the performance of his

duties under this Agreement.  Executive

shall have the duties, rights and responsibilities normally associated with his

position with the Company, together with such other reasonable duties relating

to the operation of the business of the Company and its affiliates as may be

assigned to him from time to time by the President or Chief Executive Officer

of the Company or by the Board of Directors. 

Such duties are generally set forth in the Bylaws of the Company and by

memorandum to Executive of even date with this employment agreement.  If the Company shall so request, Executive

shall act as an officer and/or director of any of the subsidiaries of the Company

as they may now exist or may be established by the Company in the future

without any compensation other than that provided for in paragraph 3.

 

2.             Term.  The term of Executive’s employment under

this Agreement (the “Term”) will begin on the date of this Agreement and

will continue, subject to the termination provisions set forth in paragraph 5

below, until the second anniversary of the date hereof; provided that this

Agreement will automatically renew for additional one-year periods unless

either party gives written notice to the other not to extend the Term not less

than 90 days prior to the then next upcoming expiration date.

 

3.             Salary and Bonus.

 

a.             Salary.  During each year of the Term, Executive will

receive a salary at the annual rate of $300,000 (the “Base Salary”).

 

 

b.             Bonus.  In addition to the Base Salary, the

Executive shall be entitled to an annual incentive bonus payable within 120

days after the end of each year ended December 31 in an amount which shall be

determined in the sole discretion of the Board of Directors taking into account

such factors concerning the performance of the Company and Executive and the

Executive’s overall compensation level, as shall be determined by the Board of

Directors.  Per annum, the amount of the

incentive bonus shall be determined in the sole discretion of the Board of

Directors and Executive shall not be entitled to any incentive bonus unless and

until such incentive bonus is approved by the Board of Directors.

 

4.             Fringe

Benefits.  In addition to the other

compensation payable pursuant to this Agreement, during the Term:

 

a.             Standard

Benefits.  Executive will be

entitled to receive such fringe benefits and perquisites, including medical and

life insurance, as are generally made available from time to time to senior

management employees and Executives of the Company and to participate in any

pension, profit–sharing, stock option or similar plan or program

established from time to time by the Company for the benefit of its senior

management employees.

 

b.             Vacation

and Sick Leave.  Executive will be

entitled to such periods of paid vacation (not less than three weeks per year)

and sick leave allowance each year that are consistent with the Company’s

vacation and sick leave policy for senior management.

 

c.             Business

Expenses.  The Company will pay or

reimburse Executive for all business–related expenses incurred by

Executive and approved by the Chief Executive Officer in writing in the course

of his performance of duties under this Agreement, subject to the procedures

established by the Company from time to time with respect to incurrence,

substantiation, reasonableness and approval. 

Also see Exhibit B relating to reimbursement of relocation costs.

 

d.             Stock

Options.  Executive shall be

entitled to participate in employee stock plans from time to time established

for the benefit of employees of the Company in accordance with the terms and

conditions of such plans. 

Simultaneously with the closing of the consolidation of the Company,

Executive received (i) pursuant to and subject to the Company’s Omnibus Stock

Incentive Plan (the “Plan”), a grant of 50,000 stock options, for common stock

of the Company.  The options are 25%

exercisable at the date of grant and the balance of which become exercisable

subject to Executive’s continuing to be employed by the Company under the

formula described in Exhibit A to this Agreement.  The options were granted (i) 50% on the closing of the

consolidation pursuant to the Company’s Registration Statement on Form S-4 at

an option exercise price of $15.00 per share and (ii) 50% on June 1, 2001 at an

option exercise price equal to the $6.77 per share.

 

Executive has previously received a grant of

35,000 shares of restricted stock pursuant to the Plan, which shares shall be

subject to repurchase by the Company on termination of Executive’s employment

for a price of $.01 per share, which repurchase option for 25% of the shares

shall lapse upon execution of this Agreement.  

The remainder of the Company’s repurchase option shall lapse under a

formula described in Exhibit A to this Agreement. Notwithstanding the

foregoing, stock

 

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options granted to Executive shall become exercisable and repurchase

restrictions on stock grants shall lapse in full upon Executive’s termination

of employment by Executive with Good Reason or by the Company without Cause,

and Executive shall have one (1) year from such termination, or remaining term

of the option, if earlier, to exercise such options.

 

5.             Termination

of Employment.

 

a.             Death

and Disability.  Executive’s

employment under this Agreement will terminate immediately upon his death and

upon 30 days’ prior written notice given by the Company in the event Executive

is determined to be “permanently disabled” (as defined below).

 

b.             For

Cause.  The Company may terminate

Executive’s employment under this Agreement for “Cause” (as defined below),

upon providing Executive 30 days’ prior written notice of termination, which

notice will describe in detail the basis of such termination and will become

effective on the 30th day after the Executive’s receipt thereof,

unless the Executive cures the alleged violation or other circumstance which

was the basis of such termination within such 30-day notice period or (ii)

sends, within such 30-day notice period, written notice to the Board disputing

in good faith the existence of Cause and requesting arbitration of such dispute

pursuant to paragraph 9 below. 

Notwithstanding the foregoing, the Company may elect to suspend all of

Executives duties and restrict his access during such 30-day period.

 

c.             For

Good Reason.  Executive may

terminate his employment under this Agreement for “Good Reason” (as defined

below) upon providing the Company 30 days’ prior written notice of termination,

which notice will detail the basis of such termination and will become

effective on the 30th day after the Company’s receipt thereof, unless the

Company cures the alleged violation or other circumstance which was the basis

of such termination within such 30-day notice period.

 

d.             Definitions.  For purposes of this Agreement:

 

(i) 

Executive will be deemed “permanently disabled” if he becomes

unable to discharge his normal duties as contemplated under this Agreement for

more than six consecutive months as a result of incapacity due to mental or

physical illness as determined by a physician acceptable to Executive and the

Company and paid by the Company, whose determination will be final and

binding.  If Executive and the Company

are unable to agree on a physician, Executive and the Company will each choose

one physician who will mutually choose the third physician, whose determination

will be final and binding.

 

(ii) 

“Cause” means either (A) a breach by Executive of any material

provisions of this Agreement, but only if, after notice provided in

subparagraph (b) above, Executive fails to cure such breach; (B) action by

Executive constituting willful misconduct or gross negligence in connection

with performing his duties hereunder; (C) an act of fraud, misappropriation of

funds or embezzlement by

 

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Executive in connection with his employment

hereunder; or (D) Executive is convicted of, pleads guilty to or confesses to

any felony.

 

(iii) 

“Good Reason” means the occurrence of any of the following,

without the prior written consent of Executive: (A) a breach by the Company of

any of its material obligations under this Agreement, but only if after

expiration of the 30–day notice period provided in subparagraph (c)

above, the Company fails to cure such breach or (B) change of location of

Company’s offices where Executive is currently employed to a location more than

30 miles from San Diego, California or (C) if Executive ceases to report to

William J. Carden or the then Chief Executive Officer of the Company, in

connection with the services under this Agreement.

 

6.             Benefits

upon Termination.

 

a.             Termination

with Cause or Resignation.  Upon

termination of Executive’s employment by the Company for Cause or a voluntary

resignation by Executive (other than for Good Reason pursuant to paragraph 5(c)

above) during the Term, the Company will remain obligated to pay Executive only

the unpaid portion of his Base Salary and benefits to the extent accrued

through the effective date of termination. 

Any amount due under this subparagraph will be payable within 30 days

after the date of termination.  In

addition to whatever other rights or remedies the Company may have at law or in

equity, all stock options held by Executive, whether vested or unvested as of

the date of termination, shall immediately expire on the date of termination

and all unvested stock-based grants shall immediately expire.

 

b.             Termination

without Cause or for Good Reason. 

The Company or the Executive shall also have the right to terminate

Executive’s employment without Cause. If the Executive terminates the

Executive’s employment without Cause, then the Severance Amount and the

additional sums as provided in Section 6b(i) and (ii)shall not be due by the

Company to the Executive.  Upon

termination of Executive’s employment (x) by the Company without Cause or (y)

by Executive for Good Reason, Executive will be entitled to the benefits

provided below, subject to signing by Executive of a general release of claims

in a form satisfactory to the Company:

 

(i)            the Company will pay as severance

pay to Executive, in monthly installments over a twelve-month period, an amount

(the “Severance Amount”) equal to one times Executive’s Base Salary and

bonus for the immediately preceding calendar year or current year if the

termination is in the first calendar year of employment (which shall be

annualized if the applicable calendar year is less than a full year) unless the

termination is covered by subsection (ii) below;

 

(ii)           in addition to the Severance Amount,

the Company will pay to Executive, in a lump sum paid within 10 days of

Executive’s notice, an amount equal to one (1.00) times Executive’s base salary

and bonus for the immediately preceding calendar year, reduced by 1/24 of such

amount times the number of complete months that have elapsed since the

effective date of this Agreement.   By

way of example, if

 

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Executive is

terminated on January 1, 2003 and his salary and bonus for 2002 was $300,000.00

then the lump sum payment shall equal $250,000.00, (calculated as  $300,000.00 minus 4/24 of $300,000.00 or

$50,000.00 to equal $250,000.00)

 

(iii)          subject

to Executive making a valid election to continue medical coverage under the

Company’s group health plan, the Company will pay Executive’s COBRA premium for

the shorter of (x) 12 months following Executive’s termination of employment or

(y) the end of the COBRA continuation period.

 

c.             No

Mitigation.   Executive will not be

required to mitigate the amount of any payment under this paragraph 6 by

seeking other employment or otherwise, nor will the amount of any payment or

benefit under this paragraph 6 be reduced by any compensation earned by

Executive as the result of employment by another employer or by retirement

benefits after the date of termination, or otherwise.

 

d              Termination

Upon Death or Permanent Disability. 

Upon termination of Executive’s employment upon Executive’s death or

permanent disability, Executive or Executive’s estate will be entitled to the

benefits provided below, subject to signing by Executive or Executive’s estate

of a general release of claims in a form satisfactory to the Company:

 

(i)  the Company will pay as severance pay to

Executive or Executive’s estate, in monthly installments over a twelve-month

period, an amount equal to the Executive’s Base Salary as in effect on the date

of termination of employment; and

 

(ii)  subject to Executive making a valid election

to continue medical coverage under the Company’s group health plan, the Company

will pay Executive’s COBRA premium for the shorter of (x) 12 months following

Executive’s termination of employment or (y) the end of the COBRA continuation

period.

 

e.             Expiration

of this Agreement.  In the event the

Term of this Agreement expires without having otherwise been previously

terminated pursuant to paragraph 5 above or by the Company without Cause,

Executive will not be entitled to any severance compensation whatsoever under

this paragraph 6.

 

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7.             No

Solicitation; Confidentiality; Competition; Cooperation

 

a.             During the

Restricted Period (defined below), neither Executive nor any

Executive-Controlled Person (defined below) will, without the prior written

consent of the Board, directly or indirectly solicit for employment, employ in

any capacity or make an unsolicited recommendation to any other person that it

employ or solicit for employment any person who is or was, at any time during

the Restricted Period, an officer, executive or employee of the Company or of

any of its affiliates.  As used in this

Agreement, the term “Executive-Controlled Person” shall mean any company,

partnership, firm or other entity as to which Executive possesses, directly or

indirectly, the power to direct or cause the direction of the management and

policies of such entity, whether through the ownership of voting securities, by

contract or otherwise.

 

b.             Executive

acknowledges that, through his status as Senior Vice President Corporate

Development of the Company, he has, and will have, possession of important,

confidential information and knowledge as to the business of the Company and

its affiliates, including, but not limited to, knowledge of marketing and

operating strategies, acquisition, leasing and other agreements, financial

results and projections, future plans, the provisions of other important

contracts entered into by the Company and its affiliates, possible acquisitions

and similar information.  Executive agrees

that all such knowledge and information constitutes a vital part of the

business of the Company and its affiliates and is by its nature trade secrets

and confidential information proprietary to the Company and its affiliates

(collectively, “Confidential Information”).  Executive agrees that he shall not, so long as the Company

remains in existence, divulge, communicate, furnish or make accessible (whether

orally or in writing or in books, articles or any other medium) to any individual,

firm, partnership or corporation, any knowledge or information with respect to

Confidential Information directly or indirectly useful in any aspect of the

business of the Company or any of its affiliates.

 

c.             All memoranda,

notes, notebooks, lists, records and other documents or papers (and all copies

thereof), including such items stored in computer memories, portable computers

and the like, on microfiche, disk or by any other means, made or compiled by or

on behalf of Executive or made available to him relating to the Company are and

shall be the Company’s property and shall be delivered to the Company promptly

upon the termination of Executive’s employment with the Company or at any other

time on request and such information shall be held confidential by Executive

after the termination of his employment with the Company.

 

d.             As used in this

Agreement, “Restricted Period” shall mean the twelve (12) months

following Executive’s termination of employment for any reason.

 

e.             Following

Executive’s termination of employment, Executive will cooperate with the

Company, its executives, counsel and other professional advisors (i) to the

extent reasonably possible with respect to the consummation of matters that

were in progress at the time of Executive’s termination of employment and (ii)

with respect to any litigation or regulatory matters arising out of or related

to the business, operations, or personnel of the Company (including

participation in depositions, hearings and trials, as and if deemed necessary

or appropriate by the Company,

 

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execution of appropriate affidavits and participation in interviews

with Company counsel).  The Company

shall compensate Executive at an hourly rate of $200.00 plus out of pocket

travel and lodging costs which have been approved in advance by the Chief

Executive Officer, for any services provided by Executive pursuant to this

paragraph 7(f).

 

f.              The provisions

contained in this paragraph 7 as to the time periods, scope of activities,

persons or entities affected, and territories restricted shall be deemed

divisible so that, if any provision contained in this paragraph 7 is determined

to be invalid or unenforceable, such provisions shall be deemed modified so as

to be valid and enforceable to the full extent lawfully permitted.

 

g.             Executive agrees

that the provisions of this paragraph 7 are reasonable and necessary for the

protection of the Company and that they may not be adequately enforced by an

action for damages and that, in the event of a breach thereof by Executive or

any Executive-Controlled Person, the Company shall be entitled to apply for and

obtain injunctive relief in any court of competent jurisdiction to restrain the

breach or threatened breach of such violation or otherwise to enforce

specifically such provisions against such violation, without the necessity of

the posting of any bond by the Company. 

Executive further covenants and agrees that if he shall violate any of

his covenants under this paragraph 7, the Company shall not be obligated

to make any payments or provide any benefits provided in paragraph 6 and the

Company shall be entitled to recover any amounts previously paid pursuant to

paragraph 6.  Such a remedy shall,

however, not be exclusive and shall be in addition to any injunctive relief or

other legal or equitable remedy to which the Company is or may be

entitled.  Accordingly, Executive agrees

that he shall reimburse the Company for any reasonable attorneys’ fees and

expenses that the Company might incur in enforcing this paragraph 7 if it

is judicially determined that Executive has breached this paragraph 7.

 

8.             Indemnification.

To the full extent permitted by applicable law, Executive shall be indemnified

and held harmless by the Company against any and all judgments, penalties,

fines, amounts paid in settlement, and other reasonable expenses (including,

without limitation, reasonable attorneys’ fees and disbursements) actually

incurred by Executive in connection with any threatened, pending or completed

action, suit or proceeding (whether civil, criminal, administrative,

investigative or other) for any action or omission in his capacity as a

director, officer or employee of the Company, its affiliates and predecessors

(for which the Company would be liable). 

Indemnification under this paragraph 8 shall be in addition to, and

not in substitution of, any other indemnification by the Company of its

officers and directors.

 

9.             Arbitration.  The parties hereto will endeavor to resolve

in good faith any controversy, disagreement or claim arising between them,

whether as to the interpretation, performance or operation of this Agreement or

any rights or obligations hereunder.  If

they are unable to do so, any such controversy, disagreement or claim will be

submitted to binding arbitration, for final resolution without appeal, by

either party giving written notice to the other of the existence of a dispute

which it desires to have arbitrated. 

The arbitration will be conducted in Orange County, California by a

single neutral arbitrator and will be held in accordance with the rules of the

American Arbitration Association.  The

decision and award of the arbitrators must be in writing and will be final and

 

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binding upon the parties hereto. 

Judgment upon the award may be entered in any court having jurisdiction

thereof, or application may be made to such court for a judicial acceptance of

the award and an order of enforcement, as the case may be.  The expenses of arbitration will be borne in

accordance with the determination of the arbitrator with respect thereto,

except as otherwise specified in paragraph 5(b) above.  Pending a decision by the arbitrator with

respect to the dispute or difference undergoing arbitration, all other obligations

of the parties will continue as stipulated herein, and all monies not directly

involved in such dispute or difference will be paid when due.

 

10.           Miscellaneous.

 

a.             Executive

represents and warrants that he is not a party to any agreement, contract or

understanding, whether employment or otherwise, which would restrict or

prohibit him from undertaking or performing employment in accordance with the

terms and conditions of this Agreement.

 

b.             The provisions of

this Agreement are severable and if any one or more provisions may be

determined to be illegal or otherwise unenforceable, in whole or in part, the

remaining provisions and any partially unenforceable provision to the extent

enforceable in any jurisdiction will remain binding and enforceable.

 

c.             The rights and

obligations of the Company under this Agreement inure to the benefit of, and

will be binding on, the Company and its successors and permitted assigns, and

the rights and obligations (other than obligations to perform services) of

Executive under this Agreement will inure to the benefit of, and will be

binding upon, Executive and his heirs, personal representatives and permitted

assigns; provided, however, that Executive shall not be entitled to

assign or delegate any of his rights and obligations under this Agreement

without the prior written consent of the Company; provided, further,

that the Company shall not have the right to assign or delegate any of its

rights or obligations under this Agreement except to a corporation, partnership

or other business entity that is, directly or indirectly, controlled by the

Company.

 

d.             Any notice to be

given under this Agreement will be personally delivered in writing or will have

been deemed duly given when received after it is posted in the United States

mail, postage prepaid, registered or certified, return receipt requested, and

if mailed to the Company, will be addressed to its principal place of business,

attention: Secretary, and if mailed to Executive, will be addressed to him at

his home address last known on the records of the Company or at such other

address or addresses as either the Company or Executive may hereafter designate

in writing to the other.

 

e.             The failure of

either party to enforce any provision or provisions of this Agreement will not

in any way be construed as a waiver of any such provision or provisions as to

any future violations thereof, nor prevent that party thereafter from enforcing

each and every other provision of this Agreement.  The rights granted the parties herein are cumulative and the

waiver of any single remedy will not constitute a waiver of such party’s right

to assert all other legal remedies available to it under the circumstances.

 

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f.              THIS AGREEMENT

WILL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF

CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS.

 

g.             Captions and

paragraph headings used herein are for convenience and are not a part of this

Agreement and will not be used in construing it.

 

h.             THIS AGREEMENT

SUPERCEEDES ANY AND ALL OTHER UNDERSTANDINGS AND AGREEMENTS BETWEEN EXECUTIVE

AND COMPANY IN ANY MANNER RELATING TO EXECUTIVE’S EMPLOYMENT, INCLUDING ANY

EMPLOYMENT AGREEMENT REFERENCED IN THE S-4 FILED BY THE COMPANY WITH THE U.S.

SECURITIES EXCHANGE COMMISSION, WHICH BECAME EFFECTIVE IN 2001 AND ALL SUCH

OTHER AGREEMENTS ARE TERMINATED. 

EXECUTIVE HEREBY RELEASES, RELIEVES AND RELINQUISHES COMPANY, ITS

OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS AND REPRESENTATIVES

(COLLECTIVELY THE “RELEASED PARTIES”) FROM ALL CLAIMS, LIABILITIES, DUTIES AND

OBLIGATIONS WHICH EXECUTIVE MAY HAVE AGAINST THE RELEASED PARTIES AND THE

EXECUTIVE AGREES TO INDEMNIFY AND HOLD THE RELEASED PARTIES HARMLESS FROM AND

AGAINST ANY AND ALL SUCH CLAIMS, LIABILITIES, DUTIES AND OBLIGATIONS.

 

i.              The Executive

agrees to abide by all Company policies including but not limited to the

requirement of strict confidentiality on all information in any manner related

to the Company.  Executive shall refer

any third party (being any party who is not an employee or board member of the

Company) inquiries concerning the operations of the Company, past, current or

future to the Chief Executive Officer.

 

j.              The Executive

shall be deemed to have resigned from his position as Chief Financial Officer

effective as of August 7, 2002.  In this

regard, the Executive shall fully cooperate in filing such information and

notices as may be required by law or requested by the Company announcing such

resignation.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the

day and year first set forth above.

 

	

   

  	

  AMERICAN SPECTRUM REALTY, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  William J. Carden, Chief Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Thomas N. Thurber

  

 

9EXHIBIT

10.1

May 8, 2002

 

Gerald E. Ludwig

Chairman

Illinois Community Bancorp, Inc.

1300 Keller Drive

Effingham, IL  62401

 

Re:                             Agreement

and Plan of Merger Among Illini Corporation (“Illini”), Effingham Merger

Corporation and Illinois Community Bancorp, Inc. (“ICBI”) dated as of November

21, 2001 (the “Merger Agreement”)

 

Dear Gerry:

In light of our recent discussions regarding the

status of Illini’s Application (the “Application”) to the Board of Governors of

the Federal Reserve (the “Board”), I am writing on behalf of Illini to

memorialize our agreement to extend the time for completing Illini’s

acquisition of ICBI.

 

As you are aware, the Merger Agreement permits either

ICBI or Illini to terminate the Merger Agreement at any time after May 31, 2002

if any of the applications for prior approval is denied and the time period for

appeals and requests for reconsideration has run.  Although the Board has not denied Illini’s Application and has

not suggested they are about to do so, we propose amending Section 8.1(f) of

the Merger Agreement to delete the reference to “May 31, 2002” and replace it

with “[May 31, 2003.]”

 

The Merger Agreement also permits either ICBI or

Illini to terminate the Merger Agreement at any time after August 31, 2002 if

the merger has not been completed by that date.  In this regard, we propose amending Section 8.1(h) to delete the

reference to “August 31, 2002” and replace it with “[August 31, 2003.]”

 

Please sign below to acknowledge that ICBI agrees to

the amendments described above.

 

	

  Illini

  Corporation

  	

   

  	

  Agreed To and Accepted By:

  
	

   

  	

   

  	

  Illinois

  Community Bancorp, Inc.

  
	

   

  	

   

  	

   

  
	

  /s/ Burnard K. McHone

  	

   

  	

  /s/ Gerald E. Ludwig

  
	

  Burnard K. McHone, President

  	

   

  	

  Gerald E. Ludwig, Chairman

  
	

   

  	

   

  	

  Date: 

  5/10/02

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