General Counsel Employment Agreement

Exhibit 10.23


EMPLOYMENT AGREEMENT


AGREEMENT, dated as of July 1, 1999, by and between Excel Legacy Corporation, a Delaware corporation (the "Company"), and S. Eric Ottesen ("Executive").


RECITALS


A. Executive is currently Senior Vice President and General Counsel of the Company.


B. The Company desires to employ Executive, effective as of May 1, 1999 (the "Effective Time"), on the terms and conditions set forth in this Agreement, and Executive desires to be so employed.


AGREEMENT


IN CONSIDERATION of the premises and the mutual covenants set forth below, the parties hereby agree as follows:


1. Employment. The Company hereby agrees to employ Executive as Senior Vice President and General Counsel, and Executive hereby accepts such employment, on the terms and conditions hereinafter set forth.


2. Term. The period of employment of Executive by the Company hereunder (the "Employment Period") shall commence on the Effective Time (the "Commencement Date") and shall continue through December 31, 2003; provided, that, commencing on January 1, 2004, and on each anniversary date thereafter, the Employment Period shall automatically be extended for one (1) additional year unless either party gives written notice not to extend this Agreement prior to six (6) months before such automatic extension would be effectuated. The Employment Period may be sooner terminated by either party in accordance with Section 6 of this Agreement.


3. Position and Duties. During the Employment Period, Executive shall serve as Senior Vice President and General Counsel of the Company. Executive shall have those powers and duties normally associated with the positions of a Senior Vice President and General Counsel and such other powers and duties as may be prescribed by the Board of Directors of the Company (the "Board"). Executive shall devote such time, attention and energies to Company affairs as are necessary to fully perform his duties (other than absences due to illness or vacation) for the Company. Notwithstanding the above, Executive shall be permitted, to the extent such activities do not materially and adversely affect the ability of Executive to fully perform his duties and responsibilities hereunder, to (i) manage Executive's personal, financial and legal affairs, and (ii) serve on civic or charitable boards or committees.


4. Place of Performance. The principal place of employment of Executive shall be at the Company's operating offices in San Diego, California.


5. Compensation and Related Matters.


(a) Salary. During the Employment Period, the Company shall pay Executive an annual base salary of $150,000 ("Base Salary"). Executive's Base Salary shall be paid in approximately equal installments in accordance with the Company's customary payroll practices. If Executive's Base Salary is increased by the Company, such increased Base Salary shall then constitute the Base Salary for all purposes of this Agreement.


(b) Bonus. The Board's compensation committee (the "Compensation Committee") shall review Executive's performance at least annually during each year of the Employment Period and cause the Company to award


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Executive a cash bonus of up to 100% of his Base Salary which the Compensation Committee shall reasonably determine as fairly compensating and rewarding Executive for services rendered to the Company and/or as an incentive for continued service to the Company. The amount of Executive's cash bonus shall be determined in the reasonable discretion of the Compensation Committee and shall be dependent upon, among other things, the achievement of certain performance levels by the Company, including, without limitation, growth in earnings, and Executive's performance and contribution to increasing the funds from operations.


(c) Stock Options. Executive shall be eligible to participate in the Company's Stock Option Plan in the same manner as its other executives, as determined in the discretion of the Company's Compensation Committee.


(d) Expenses. The Company shall promptly reimburse Executive for all reasonable business expenses upon the presentation of reasonably itemized statements of such expenses in accordance with the Company's policies and procedures now in force or as such policies and procedures may be modified with respect to all senior executive officers of the Company.


(e) Vacation. Executive shall be entitled to the number of weeks of vacation per year provided to the Company's senior executive officers, but in no event less than four (4) weeks annually.


(f) Welfare, Pension and Incentive Benefit Plans. During the Employment Period, Executive (and his spouse and dependents to the extent provided therein) shall be entitled to participate in and be covered under all the welfare benefit plans or programs maintained by the Company from time to time for the benefit of its senior executives including, without limitation, all medical, hospitalization, dental, disability, life insurance, accidental death and dismemberment and travel accident insurance plans and programs. In addition, during the Employment Period, Executive shall be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time to time by the Company for the benefit of its senior executives, or any annual incentive or long-term performance plans.


(g) Automobile Allowance. During the Employment Period, the Company shall provide Executive with an automobile allowance of at least $6,000 per year. The automobile allowance shall commence upon the second anniversary of the Commencement Date.


6. Termination. Executive's employment hereunder may be terminated during the Employment Period under the following circumstances:


(a) Death. Executive's employment hereunder shall terminate upon his death.


(b) Disability. If, as a result of Executive's incapacity due to physical or mental illness, Executive shall have been substantially unable to perform his duties hereunder for an entire period of six (6) consecutive months, and within thirty (30) days after written Notice of Termination (as defined in Section 7(a)) is given after such six (6) month period, Executive shall not have returned to the substantial performance of his duties on a full-time basis, the Company shall have the right to terminate Executive's employment hereunder for "Disability", and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement.


(c) Cause. The Company shall have the right to terminate Executive's employment for Cause, and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement. For purposes of this Agreement, the Company shall have "Cause" to terminate Executive's employment upon Executive's:


(i) conviction of, or plea of guilty or nolo contendere
to, a felony; or


(ii) willful and continued failure to use reasonable
best efforts to substantially perform his duties hereunder
(other than such failure resulting from Executive's incapacity
due to physical or mental illness or subsequent to the issuance
of a Notice of Termination by Executive for Good Reason (as
defined in Section 6(d)) after demand for substantial
performance is delivered by the Company in writing that
specifically identifies the manner in which the Company believes
Executive has not used reasonable best efforts to substantially
perform his duties; or


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(iii) willful misconduct (including, but not limited to, a
willful breach of the provisions of Section 10) that is materially
economically injurious to the Company or to any entity in control of,
controlled by or under common control with the Company ("Affiliate").


For purposes of this Section 6(c), no act, or failure to act, by Executive shall be considered "willful" unless committed in bad faith and without a reasonable belief that the act or omission was in the best interests of the Company or any Affiliates thereof; provided, however, that the willful requirement outlined in paragraphs (ii) or (iii) above shall be deemed to have occurred if the Executive's action or non-action continues for more than ten (10) days after Executive has received written notice of the inappropriate action or non-action. Cause shall not exist under paragraph (ii) or (iii) above unless and until the Company has delivered to Executive a copy of a resolution duly adopted by a majority of the Board (excluding Executive for purposes of determining such majority) at a meeting of the Board called and held for such purpose (after reasonable (but in no event less than thirty (30) days) notice to Executive and an opportunity for Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board, Executive was guilty of the conduct set forth in paragraph (ii) or (iii) and specifying the particulars thereof in detail. This Section 6(c) shall not prevent Executive from challenging in any court of competent jurisdiction the Board's determination that Cause exists or that Executive has failed to cure any act (or failure to act) that purportedly formed the basis for the Board's determination.


(d) Good Reason. Executive may terminate his employment for "Good Reason" within thirty (30) days after Executive has actual knowledge of the occurrence, without the written consent of Executive, of one of the following events that has not been cured within thirty (30) days after written notice thereof has been given by Executive to the Company:


(i) the assignment to Executive of duties materially and
adversely inconsistent with Executive's status as a Senior Vice
President and General Counsel of the Company or a material and adverse
alteration in the nature of Executive's duties and/or responsibilities,
reporting obligations, titles or authority;


(ii) a reduction by the Company in Executive's Base Salary or a
failure by the Company to pay any such amounts when due;


(iii) the relocation of the Company's San Diego operating office
or Executive's own office location more than thirty (30) miles from San
Diego, California;


(iv) any purported termination of Executive's employment for
Cause which is not effected pursuant to the procedures of Section 6(c)
(and for purposes of this Agreement, no such purported termination shall
be effective);


(v) the Company's failure to substantially provide any material
employee benefits due to be provided to Executive;


(vi) the Company's failure to provide in all material respects
the indemnification set forth in Section 11 of this Agreement; or


(vii) a Change in Control (as defined below) of the Company.


Executive's right to terminate his employment hereunder for Good Reason shall not be affected by his incapacity due to physical or mental illness. Executive's continued employment during the thirty (30) day period referred to above in this paragraph (d) shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.


For purposes of this Agreement, a "Change in Control" of the Company means the occurrence of one of the following events:


(1) individuals who, on the Commencement Date, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at
least a majority of the Board, provided that any person


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becoming a director subsequent to the Commencement Date whose election
or nomination for election was approved by a vote of a majority of the
Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such nomination)
shall be an Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a result
of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies by
or on behalf of any person other than the Board shall be an Incumbent
Director;


(2) any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after
the Commencement Date, a "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities eligible to vote for the election
of the Board (the "Company Voting Securities"); provided, however, that
an event described in this paragraph (2) shall not be deemed to be a
Change in Control if any of following becomes such a beneficial owner:
(A) the Company or any majority-owned subsidiary (provided, that this
exclusion applies solely to the ownership levels of the Company or the
majority-owned subsidiary), (B) any tax-qualified, broad-based employee
benefit plan sponsored or maintained by the Company or any
majority-owned subsidiary, (C) any underwriter temporarily holding
securities pursuant to an offering of such securities, (D) any person
pursuant to a Non-Qualifying Transaction (as defined in paragraph (3)),
or (E) Executive or any group of persons including Executive (or any
entity controlled by Executive or any group of persons including
Executive);


(3) the consummation of a merger, consolidation, share exchange
or similar form of transaction involving the Company or any of its
subsidiaries, or the sale of all or substantially all of the Company's
assets (a "Business Transaction"), unless immediately following such
Business Transaction (i) more than 50% of the total voting power of the
entity resulting from such Business Transaction or the entity acquiring
the Company's assets in such Business Transaction (the "Surviving
Corporation") is beneficially owned, directly or indirectly, by the
Company's shareholders immediately prior to any such Business
Transaction, and (ii) no person (other than the persons set forth in
clauses (A), (B), or (C) of paragraph (2) above or any tax-qualified,
broad-based employee benefit plan of the Surviving Corporation or its
Affiliates) beneficially owns, directly or indirectly, 30% or more of
the total voting power of the Surviving Corporation (a "Non-Qualifying
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