EXHIBIT 10.17
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of the 13th day of
January, 1998, by and between Beazer Homes USA, Inc., a Delaware corporation
(the "Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive"), an individual resident
in the State of Georgia.
W I T N E S S E T H:
WHEREAS, the Company wishes to employ the Executive, and the Executive
wishes to accept employment with the Company, on the terms and conditions set
forth herein; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company, to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with compensation and
benefits arrangements currently and upon a Change of Control which ensure that
the compensation and benefits expectations of the Executive will be satisfied
and which are competitive with those of other corporations;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. EMPLOYMENT.
1.1 EMPLOYMENT AND DUTIES. The Company hereby agrees to employ
Executive for the Term (as hereinafter defined) as its Executive Vice President,
Operations, subject to the direction of the Chief Executive Officer of the
Company (the "CEO") and, in connection therewith, to perform such duties as he
shall reasonably be directed by the CEO to perform. In performing such duties
hereunder, Executive shall comply with the policies and procedures as adopted
from time to time by the Board, shall give the Company the benefit of his
special knowledge, skills, contacts and business experience, shall perform his
duties and carry out his responsibilities hereunder in a diligent manner, shall
be just and
faithful in the performance of his duties and in carrying out his
responsibilities and shall devote all of his business time, attention,
ability and energy exclusively to the performance of his duties and
responsibilities hereunder; PROVIDED, HOWEVER, that Executive may, with the
approval of the Board from time to time, serve, or continue to serve, on the
board of directors of, and hold any other offices or positions in, companies
or organizations, which, in the Board's judgment, will not present any
conflict of interest with the Company or any of its affiliates or divisions,
or adversely affect the performance of Executive's duties pursuant to this
Agreement. Executive hereby accepts such employment and agrees to render
such services.
1.2 LOCATION. The principal location for performance of Executive's
services hereunder shall be at the offices of Beazer Homes USA, Inc. which are
currently located in Atlanta, Georgia, subject to reasonable travel requirements
during the course of such performance. In the event circumstances require a
change in such location to another city, Executive shall have not less than
three (3) months advance notice of the effective date of the relocation.
2. EMPLOYMENT TERM.
2.1 TERM. The term of Executive's employment hereunder (the "Term")
shall commence effective as of the date hereof and shall end on January 13, 2000
(the "Initial Term"), unless terminated or extended as provided herein
(including pursuant to Section 6 of this Agreement); PROVIDED, HOWEVER; that the
Term shall be extended and this Agreement shall be automatically renewed for
successive one-year periods unless: (i) this Agreement is terminated as
otherwise provided herein; or (ii) Executive or the Company provides written
notice to the other of such party's desire not to extend this Agreement at least
sixty (60) days prior to the expiration date of the Term of this Agreement
pursuant to this Section 2.1.
3. COMPENSATION AND BENEFITS.
3.1 CASH COMPENSATION.
(a) BASE SALARY. In consideration of Executive's services
hereunder the Company shall pay Executive an aggregate base salary at an
annualized rate, effective as of the date hereof (until adjusted as provided
below), of $300,000, payable, in each case, in such nearly equal installments as
may be customary for executive officers employed by the Company (but not less
frequently than monthly) or as may otherwise be agreed to between the Company
and Executive, in arrears (the "Base Salary"). The Base Salary for each year
shall be prorated according to the number of days in such year during which this
Agreement is in effect. Commencing October 1, 1998 and on each October 1
thereafter, the Base Salary may be adjusted (upward or downward) by the
Compensation Committee of the Board,
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taking into consideration Executive's performance, general cost of living
increases, the salaries provided by comparable businesses, the financial
condition of the Company and other similar matters.
(b) BONUSES; STOCK INCENTIVE PLANS. Executive will be eligible
to participate in the Company's bonus and stock incentive plans (including,
without limitation, the Company's 1994 Stock Incentive Plan) at the discretion
of the Compensation Committee of the Board. The amount and terms of, and the
targets, conditions and restrictions applicable to each bonus or other incentive
award shall be subject to the provisions of any such plan and of the applicable
award letter duly executed and delivered by the Company.
3.2 PARTICIPATION IN BENEFIT PLANS. The payments provided in Section
3 hereof are in addition to any benefits to which Executive may be, or may
become, entitled under any benefit plan or program of the Company for which key
executives are or shall become eligible, including, without limitation, pension,
401(k), life and disability insurance benefits and/or plans. Further, Executive
shall be eligible to receive during the period of his employment under this
Agreement, all benefits and emoluments for which key executives are eligible
under every such plan or program to the extent permissible under the general
terms and provisions of such plans or programs and in accordance with the
provisions thereof.
3.3 VACATION. Executive shall be entitled to twenty (20) working
days of compensated vacation in each fiscal year, to be taken at times which
do not unreasonably interfere with the performance of Executive's duties
hereunder. Any unused vacation time from any fiscal year shall be subject to
accumulation or forfeiture in accordance with Company policy as in effect
from time to time.
3.4 EXPENSES. The Company will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement. Executive shall keep detailed
and accurate records of expenses incurred in connection with the performance of
his duties hereunder and reimbursement therefor shall be in accordance with
policies and procedures to be established from time to time by the Board.
4. TERMINATION.
4.1 GENERAL. In addition to the right of either party to terminate
this Agreement pursuant to Section 2 hereof, the Company shall have right to
terminate the employment of Executive as set forth in this Section 4.
4.2 TERMINATION FOR CAUSE. In addition to any other remedies which
the Company may have at law or in equity, the CEO may immediately terminate
Executive's employment under this Agreement by giving Executive written notice
of such termination
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upon or at any time following the occurrence of any of the following events, and
each such termination shall constitute a termination for "cause":
(i) Any act or failure to act (or series or combination thereof)
by Executive done with the intent to harm in any material
respect the interests of the Company or any affiliate
thereof;
(ii) The commission by Executive of a felony;
(iii) The perpetration by Executive of a dishonest act or
common law fraud against the Company or any affiliate
thereof;
(iv) A grossly negligent act or failure to act (or series or
combination thereof) by Executive detrimental in any
material respect to the interests of the Company or any
affiliate thereof;
(v) The material breach by Executive of his agreements or
obligations under this Agreement; or
(vi) The continued refusal to follow the directives of the CEO
which are consistent with Executive's duties and
responsibilities identified in Section 1.1 hereof.
Upon the early termination of Executive's employment under this Agreement by the
Company for "cause" the Company shall pay to Executive (i) an amount equal to
Executive's Base Salary accrued through the effective date of termination at the
rate in effect at the time notice of termination is given, payable at the time
such payment is due; and (ii) at the time such payments are due, all other
amounts to which Executive is entitled hereunder (including expense
reimbursement amounts accrued to the effective date of termination or amounts
under any benefit plan of the Company, but expressly excluding any bonus or
other incentive payment (or portion thereof) in respect of the fiscal year in
which this Agreement is so terminated or any fiscal year of the Company
thereafter), and, upon payment of such amounts, the Company shall have no
further obligation to Executive under this Agreement.
4.3 DISABILITY OF EXECUTIVE. Subject to applicable law, if Executive
shall become ill or be injured or otherwise become disabled or incapacitated
such that, in the opinion of the Board, he cannot fully carry out and perform
his duties hereunder, and such disability or incapacity shall continue for a
period of forty-five (45) consecutive days, the Board may, at any time
thereafter, by giving Executive prior written notice, fully and finally
terminate his employment under this Agreement. Termination under this Section
4.3 shall be effective as of the date provided in such notice, which date shall
not be fewer than ninety (90) days after such notice is delivered to Executive
or his representative, and the Company
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shall pay Executive his Base Salary accrued to the effective date of
termination at the rate in effect at the time of such notice, payable at the
time such payment is due. Upon payment of (i) such accrued Base Salary; and
(ii) all other amounts to which Executive may be entitled hereunder,
including, without limitation, (A) subject to the terms of any such bonus or
incentive award, any bonus or incentive payment to which the Executive would
have been entitled pursuant to Section 3.1(b) hereof (prorated for the period
up to the effective date of termination), provided the targets and other
conditions applicable thereto are met, (B) any expense reimbursement amounts
accrued to the effective date of termination, and (C) any amounts under any
other benefit plan of the Company, in any case at the time such payments
would otherwise have become due and payable in the absence of such
termination, and the Company shall have no further obligation to Executive
under this Agreement.
4.4 DEATH OF EXECUTIVE. This Agreement shall automatically terminate
upon the death of Executive. Upon the early termination of this Agreement as a
result of death, the Company shall pay Executive's estate: (i) an amount equal
to Executive's Base Salary accrued through the effective date of termination at
the rate in effect at the effective date of termination, payable at the time
such payment is due; and (ii) all other amounts to which Executive is entitled
hereunder, including, without limitation, (A) subject to the terms of any such
bonus or incentive award, any bonus or incentive payment to which the Executive
would have been entitled pursuant to Section 3.1(b) hereof (prorated for the
period up to the effective date of termination), provided the targets and other
conditions applicable thereto are met, (B) any expense reimbursement amounts
accrued to the effective date of termination, and (C) any amounts under any
other benefit plan of the Company, in each case at the time such payments would
otherwise have become due any payable in the absence of such termination, and
the Company shall have no further obligations to Executive under this Agreement.
4.5 TERMINATION NOT OTHERWISE PROVIDED FOR. This Section 4.5 governs
all terminations of Executive's employment hereunder which are not otherwise
provided for in this Section 4 or Section 6 and expressly contemplates a
termination of Executive without "cause" and a termination of Executive by the
Company by reason of retirement. Except as otherwise provided in Section 4.2,
4.3, 4.4 or 6, Executive's employment under this Agreement may be terminated by
giving Executive written notice thereof, effective as of the date provided in
such notice. Upon such termination of the employment of Executive, the Company
shall pay to Executive: (i) an amount equal to Executive's Base Salary payable
for the remainder of the Term at the time such payments would otherwise have
become due and payable in the absence of such termination at the rate in effect
on the date of termination; and (ii) all other amounts to which Executive is
entitled, including (A) subject to the prior approval of the Compensation
Committee of the Board of Directors of the Company (which approval shall not be
unreasonably withheld) and subject to the terms of any such bonus or incentive
award, any bonus or incentive payment to which the Executive would have been
entitled pursuant to Section 3.1(b) hereof (prorated for the period up to the
effective date of
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termination), provided the targets and other conditions applicable thereto
are met, (B) any expense reimbursement amounts accrued to the effective date
of termination, and (C) any amounts under any other benefit plan of the
Company, in each case at the time such payments would otherwise have become
due and payable in the absence of such termination, and the Company shall
have no further obligations to Executive under this Agreement.
4.6 TERMINATION BY EXECUTIVE. Executive may, with or without cause,
terminate his employment under this Agreement by giving the Company at least
sixty (60) days' prior written notice of such termination (which may be waived
by the Company), and after the effective date of such termination, the Company
shall have no further obligation to Executive under this Agreement, including,
without limitation, no obligation to pay any pro-rata amount of any bonus or
incentive payment in respect of the period up to the date of termination.
5. EMPLOYMENT COVENANTS.
5.1 COVENANT NOT TO COMPETE. Executive recognizes and acknowledges
that the Company is placing its confidence and trust in Executive. Executive,
therefore, covenants and agrees that during the Applicable Non-Compete Period
(as defined below) Executive shall not, either directly or indirectly, without
the prior written consent of the Board:
(i) Engage in or carry on any business or in any way become
associated with any business which is similar to or is in
competition with the Business of the Company (as such term
is used and defined herein). As used in this Section 5, the
term "Business of the Company" shall include all business
activities in which the Company is now engaged, including
but not limited to, the purchase of land (or options
therefor) for development and the construction of
residential homes for resale to consumers and shall further
include any business in which the Company is engaged at any
time during the Term;
(ii) Solicit the business of any person or entity, on behalf of
himself or any other person or entity, which is or has been
at any time during the term of this Agreement a customer or
supplier of the Company including, but not limited to,
former or present customers or suppliers with whom Executive
has had personal contact during, or by reason of, his
relationship with the Company;
(iii) Be or become an employee, agent, consultant,
representative, director or officer of, or be otherwise
in any manner associated with,
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any person, firm, corporation, association or other
entity which is engaged in or is carrying on any
business which is similar to or in competition with the
Business of the Company;
(iv) Solicit for employment or employ any person employed by the
Company at any time during the twelve (12)-month period
immediately preceding such solicitation or employment; or
(v) Be or become a shareholder, joint venturer, owner (in whole
or in part), or partner, or be or become associated with or
have any proprietary or financial interest in or of any
firm, corporation, association or other entity which is
engaged in or is carrying on any business which is similar
to or in competition with the Business of the Company.
Notwithstanding the proceeding sentence, passive equity
investments by Executive of $25,000 or less in any entity or
affiliated group of any entity which is engaged in or is
carrying on any business which is similar to or in
competition with the Business of the Company shall not be
deemed to violate this Section 5.1.
Executive hereby recognizes and acknowledges that the existing Business of the
Company extends throughout the States of Georgia, Tennessee, South Carolina,
North Carolina, Texas, California, Arizona, Nevada and Florida and therefore
agrees that the covenants not to compete contained in this Section 5.1 shall be
applicable in and throughout such states, as well as throughout such additional
areas and states in which the Company may be (or has prepared written plans to
be) doing business as of the date of termination of Executive's employment.
Executive further warrants and represents that, because of his varied skill and
abilities, he does not need to compete with the Business of the Company and that
this Agreement will not prevent him from earning a livelihood and acknowledges
that the restrictions contained in this Section 5.1 constitute reasonable
protections for the Company.
As used in this Section 5.1, "Applicable Non-Compete Period" shall
mean: (a) unless and until the Executive's employment under this Agreement is
terminated prior to the scheduled end of the Term, the period beginning on
January 13, 1998 and ending on the date which is 180 days after the scheduled
end of the Term (as such Term may be extended from time to time pursuant to
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Section 2.1 hereof); (b) if the Executive's employment under this Agreement is
terminated pursuant to Section 4.2, Section 4.3 or Section 4.6 hereof or for any
other reason (other than as set forth in clause (c) below), the period beginning
on January 13, 1998 and ending on the date which is 180 days after scheduled end
of the Term (as such Term may be extended from time to time pursuant to Section
2.1 hereof); (c) if the Executive's employment under this Agreement is
terminated without "cause" pursuant to Section 4.5 hereof, the period beginning
on January 13, 1998 and ending on the date of the scheduled end of the Term (as
such Term may be extended from time to time pursuant to Section 2.1 hereof); (d)
if on or prior to the date of the scheduled end of the Term (as such Term may be
extended from time to time pursuant to Section 2.1 hereof), the Executive
rejects an offer by the Company to extend this Agreement pursuant to Section 2.1
hereof on reasonable terms, the period beginning on January 13, 1998 and ending
on the date which is 180 days after the scheduled end of the Term (as such Term
may be extended from time to time pursuant to Section 2.1 hereof); and (e) if
the Company elects not to extend this Agreement pursuant to Section 2.1 hereof,
the period beginning on January 13, 1998 and ending on the date of the scheduled
end of the Term (as such Term may be extended from time to time pursuant to
Section 2.1 hereof).
5.2 TRADE SECRETS AND CONFIDENTIAL INFORMATION. Executive recognizes
and acknowledges that certain information including, without limitation,
information pertaining to the financial condition of the Company, its systems,
methods of doing business, agreements with customers or suppliers or other
aspects of the Business of the Company or which is sufficiently secret to derive
economic value from not being disclosed ("Confidential Information") may be made
available or otherwise come into the possession of Executive by reason of his
employment with the Company. Accordingly, Executive agrees that he will not
(either during or after the term of his employment with the Company) disclose
any Confidential Information to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever or make use to his personal
advantage or to the advantage of any third party, of any Confidential
Information, without the prior written consent of the Board. Executive shall,
upon termination of employment, return to the Company all documents, diskettes,
electronic or digital storage devices or any other items which reflect
Confidential Information (including copies thereof). Notwithstanding anything
heretofore stated in this Section 5.2, Executive's obligations under this
Section 5.2 shall not, after termination of Executive's employment with the
Company, apply to information which has become generally available to the public
without any action or omission of Executive (except that any Confidential
Information which is disclosed to any third party by an employee or
representative of the Company who is not authorized to make such disclosure
shall be deemed to remain confidential and protectable by Executive under this
Section 5.2).
5.3 RECORDS. All files, records, memoranda, documents, diskettes,
electronic or digital storage devices or any other items regarding former,
existing or prospective customers of the Company or relating in any manner
whatsoever to Confidential Information or the Business of the Company
(collectively, "Records"), whether prepared by Executive or otherwise coming
into his possession, shall be the exclusive property of the Company. All
Records shall be immediately placed in the physical possession of the Company
upon the termination of Executive's employment with the Company, or at any other
time specified by the Board. The retention and use by Executive of duplicates
in any form of Records is prohibited after the Executive's employment with the
Company.
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5.4 BREACH. Executive hereby recognizes and acknowledges that
irreparable injury or damage shall result to the Company in the event of a
breach or threatened breach by Executive of any of the terms or provisions of
this Section 5, and Executive therefore agrees that the Company shall be
entitled to an injunction restraining Executive from engaging in any activity
constituting such breach or threatened breach. Nothing contained herein shall
be construed as prohibiting the Company from pursuing any other remedies
available to the Company at law or in equity for such breach or threatened
breach, including but not limited to, the recovery of damages from Executive
and, if Executive is an employee of the Company, the termination of his
employment with the Company in accordance with the terms and provisions of this
Agreement.
5.5 SURVIVAL. Notwithstanding the termination of the employment of
Executive or the termination of this Agreement, the provisions of this Section 5
shall survive and be binding upon Executive unless a written agreement which
specifically refers to the termination of the obligations and covenants of this
Section 5 is executed by the Company.
6. CHANGE OF CONTROL.
6.1 GENERAL. In the event of a Change of Control (as defined in
Section 6.3), the provisions of this Section 6 shall govern the employment of
the Executive with respect to matters covered by this Section 6 and to the
extent that the provisions of this Section 6 are contrary to or inconsistent
with any other provisions of this Agreement the provisions of this Section 6
shall be controlling.
6.2 CERTAIN DEFINITIONS.
(a) The "Change of Control Effective Date" shall mean the first
date during the Change of Control Period (as defined in Section 6.2(b)) on which
a Change of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the "Change of Control Effective Date" shall mean the
date immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the second anniversary of the date
hereof; provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control
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Period shall be automatically extended so as to terminate two years from such
Renewal Date, unless at least 60 days prior to the Renewal Date the Company
shall give notice to the Executive that the Change of Control Period shall not
be so extended.
6.3 CHANGE OF CONTROL. For the purpose hereof, a "Change of Control"
shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (x) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control:
(A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A),
(B), and (C) of subsection (iii) of this Section 6.3; or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the
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Company (a "Business Combination"), in each case,
unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who
were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of
directors, as the case may be, of the corporation
resulting from such Business Combination (including,
without limitation, a corporation which as a result of
such transaction owns the Company or all or
substantially all of the Company's assets either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no
Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation
resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common
stock of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation
except to the extent that such ownership existed prior
to the Business Combination and (C) at least a majority
of the members of the board of directors of the
corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
6.4 EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Change of Control Effective Date and ending on the
second anniversary of such date (the "Change of Control Employment Period").
6.5 TERMS OF EMPLOYMENT.
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(a) POSITION AND DUTIES. During the Change of Control
Employment Period, (i) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Change of Control Effective Date; and (ii) the
Executive's services shall be performed at the location where the Executive was
employed immediately preceding the Change of Control Effective Date or any
office or location less than 35 miles from such location.
(b) DEVOTION OF TIME. During the Change of Control Employment
Period, and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Change of Control
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Change of
Control Effective Date, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) subsequent to the Change of
Control Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
6.6 COMPENSATION.
(a) BASE SALARY. During the Change of Control Employment
Period, the Executive shall receive an annual base salary ("Change of Control
Base Salary"), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary
which has been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period immediately preceding
the month in which the Change of Control Effective Date occurs. During the
Change of Control Employment Period, the Change of Control Base Salary shall be
reviewed no more than 12 months after the last salary increase awarded to the
Executive prior to the Change of Control Effective Date and thereafter at least
annually. Any increase in Change of Control Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Change of Control Base Salary shall not be reduced after any such increase and
the term Change of Control Base Salary as utilized in this Agreement shall refer
to Change of Control Base Salary as so increased. As used in this
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Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(b) ANNUAL BONUS. In addition to Change of Control Base Salary,
the Executive shall be awarded, for each fiscal year ending during the Change of
Control Employment Period, an annual bonus (the "Change of Control Bonus") in
cash at least equal to the Executive's highest annual bonus under the Company's
incentive plans (including, without limitation, the Company's Value Created
Incentive Plan (the "VCIP")), for the last three full fiscal years prior to the
Change of Control Effective Date (annualized in the event that the Executive was
not employed by the Company for the whole of any such fiscal year) (the "Recent
Annual Bonus"); provided, however, that if (A) the Executive did not receive an
annual bonus during the last full fiscal year immediately preceding the Change
of Control Effective Date because the Executive was not employed by the Company
for the whole of such year or (B) the Executive was not employed by the Company
during any part of the last full fiscal year immediately preceding the Change
of Control Effective Date, the Change of Control Bonus shall at least equal the
amount the Executive was to receive under the VCIP based on the Company's budget
(as such budget was approved by the Board), the calculation of which was
included as an attachment to the Executive's employment letter at the time the
Executive commenced employment with the Company. Each such Change of Control
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Change of Control Bonus is awarded,
unless the Executive shall elect to defer the receipt of such Change of Control
Bonus.
(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Change
of Control Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans, practices, policies and programs
applicable generally to other key executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Change of Control
Effective Date or if more favorable to the Executive, those provided generally
at any time after the Change of Control Effective Date to other key executives
of the Company and its affiliated companies.
(d) WELFARE BENEFIT PLANS. During the Change of Control
Employment Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, pension, 401(k),
medical, prescription, dental, disability, employee life, group life,
13
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other key executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable in the aggregate,
than the most favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 120-day period immediately
preceding the Change of Control Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Change of Control
Effective Date to other key executives of the Company and its affiliated
companies.
(e) EXPENSES. During the Change of Control Employment Period,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day period
immediately preceding the Change of Control Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with respect to
other key executives of the Company and its affiliated companies.
(f) FRINGE BENEFITS. During the Change of Control Employment
Period, the Executive shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services, payment of club dues, and, if
applicable, use of an automobile and payment of related expenses, in accordance
with the most favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for the Executive at any time during the
120-day period immediately preceding the Change of Control Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other key executives of the Company and its affiliated
companies.
(g) OFFICE AND SUPPORT STAFF. During the Change of Control
Employment Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies
at any time during the 120-day period immediately preceding the Change of
Control Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other key executives of the
Company and its affiliated companies.
(h) VACATION. During the Change of Control Employment Period,
the Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices provided to the Executive by
the Company and its affiliated companies at any time during the 120-day period
immediately preceding the Change of Control Effective Date or, if more favorable
to the Executive, as provided generally at any time thereafter with respect to
other key executives of the Company and its affiliated
14
companies, but in no event shall Executive receive less than twenty working days
of compensated vacation time in each fiscal year.
6.7 TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the Change of Control
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Change of Control Employment Period
(pursuant to the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 8.2 of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 90th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 90 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of the Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative.
(b) CAUSE. The Company may terminate the Executive's
employment during the Change of Control Employment Period for Cause. For
purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive
Officer believes that the Executive has not substantially
performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interest
15
of the Company. Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the executive a
copy of a resolution duly adopted by the affirmative vote of not less that
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specify the particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including
status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
Section 6.5(a) of this Agreement, or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 6.6 of this Agreement, other than an
isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than as provided in
Section 6.5(a)(ii) hereof or the Company's requiring
the Executive to travel on Company business to a
substantially greater extent than required immediately
prior to the Change of Control Effective Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
16
(v) any failure by the Company to comply with and satisfy
Section 7.3 of this Agreement.
For purposes of this Section 6.7(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this Agreement
to the contrary notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first anniversary of the
Change of Control Effective Date shall be deemed to be a termination for Good
Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 8.2 of
the Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6.8 OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If,
during the Change of Control Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or Disability or the
Executive shall terminate employment for Good Reason:
17
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate
of the following amounts:
(A) the sum of (1) the Executive's Change of Control
Base Salary through the Date of Termination to the
extent not theretofore paid, (2) the product of
(x) the higher of (I) the Recent Annual Bonus and
(II) the Change of Control Bonus paid or payable,
including any bonus or portion thereof which has
been earned but deferred (and annualized for any
fiscal year consisting of less than twelve full
months or during which the Executive was employed
for less than twelve full months), for the most
recently completed fiscal year during the Change
of Control Employment Period, if any (such higher
amount being referred to as the "Highest Annual
Bonus") and (y) a fraction, the numerator of which
is the number of days in the current fiscal year
through the Date of Termination, and the
denominator of which is 365 and (3) any
compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum
of the amounts described in clauses (1), (2), and
(3) shall be hereinafter referred to as the
"Accrued Obligations"); and
(B) an amount equal to the product of (1) 2, and (2)
the sum of (x) the Executive's Change of Control
Base Salary and (y) the Highest Annual Bonus; and
(C) an amount equal to the excess of (1) the actuarial
equivalent of the benefit under the Company's
qualified defined benefit retirement plan (the
"Retirement Plan") (utilizing actuarial
assumptions no less favorable to the Executive
than those in effect under the Company's
Retirement Plan immediately prior to the Change of
Control Effective Date), and any excess or
supplemental retirement plan in which the
Executive participates (together, the "SERP")
which the Executive would receive if the
Executive's employment continued for two years
after the Date of Termination
18
assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the
Executive's compensation in each of the two years
is that required by Section 6.6(a) and Section
6.6(b), over (2) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if
any, under the Retirement Plan and the SERP as of
the Date of Termination;
(ii) for two years after the Executive's Date of Termination, or
such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have
been provided to them in accordance with the plans,
programs, practices and policies described in Section 6.6(d)
of this Agreement if the Executive's employment had not been
terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to
other key executives of the Company and its affiliated
companies and their families, provided, however, that if the
Executive becomes re-employed with another employer and is
eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable
period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits)
of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall
be considered to have remained employed until two years
after the Date of Termination and to have retired on the
last day of such period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the
scope and provider of which shall be selected by the
Executive in his sole discretion; and
(iv) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which
the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the
Company and its affiliated companies and any reimbursement
amounts required to be paid to Executive by the Company and
its affiliated companies (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits").
19
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Change of Control Employment Period,
this Agreement shall terminate without further obligations to the Executive's
legal representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6.8(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of key executives of the
Company and affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
key executives and their beneficiaries at any time during the 120-day period
immediately preceding the Change of Control Effective Date or, if more favorable
to the Executive's estate and/or the Executive's beneficiaries, as in effect on
the date of the Executive's death with respect to other key executives of the
Company and its affiliated companies and their beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Change of Control Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6.8(c) shall include, without limitation, and the Executive
shall be entitled after the Disability Effective Date to receive, disability and
other benefits at least equal to the most favorable of those generally provided
by the Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other key
executives and their families at any time during the 120-day period immediately
preceding the Change of Control Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time thereafter
generally with respect to other key executives of the Company and its affiliated
companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Change of Control Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (x) his Change of
Control Base Salary through the Date of Termination, (y) the amount of any
compensation previously deferred by the Executive, and (z) Other Benefits, in
each case to the extent theretofore unpaid. If the Executive voluntarily
terminates employment during the Change of Control Employment Period, excluding
a
20
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations and the timely
payment or provision of Other Benefits. In such case, all Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination.
6.9 NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with any such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
6.10 FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest by the Company, provided that the Executive prevails in at least one
material issue, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
6.11 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 6.11) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then
21
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest or penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 6.11(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the "Reduced Amount") that could be paid to the Executive such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate, shall
be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 6.11(c), all
determinations required to be made under this Section 6.11, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by Deloitte & Touche LLP or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally-recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 6.11, shall be paid by the Company to the Executive within five
days of the receipt of the Accounting Firm's determination. Any determination
by the Accounting Firm shall be binding upon the Company and the Executive. As
a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 6.11(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
22
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive
in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 6.11(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and ▇▇▇ for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and ▇▇▇ for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount.
23
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 6.11(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 6.11(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 6.11(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
7. SUCCESSORS; ASSIGNS.
7.1 This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
7.2 The Company shall have the right to assign this Agreement and to
delegate all of its rights, duties and obligations hereunder to any entity which
controls the Company, which the Company controls or which may be the result of
the merger, consolidation, acquisition or reorganization of the Company and
another entity. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
7.3 The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
8. MISCELLANEOUS.
24
8.1 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.
8.2 Any notices to be given hereunder by either party to the other
may be effected by personal delivery in writing, via facsimile transmission
or by mail, registered or certified, postage prepaid with return receipt
requested. Notices shall be addressed to the parties as follows:
If to the Company: Beazer Homes USA, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Executive: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party may change his or its address by written notice in accordance with
this Section 8.2. Notices delivered personally shall be deemed communicated as
of actual receipt; notices sent via facsimile transmission shall be deemed
communicated as of receipt by the sender of written confirmation of transmission
thereof; mailed notices shall be deemed communicated as of three (3) days after
proper mailing.
8.3 This Agreement supersedes any and all other prior or
contemporaneous agreements, either oral or in writing, between the parties
hereto with respect to the subject matter hereof and this Agreement contains all
of the covenants and agreements between the parties with respect to employment
of Executive by the Company.
8.4 The failure of the Executive or the Company to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.
8.5 Except as otherwise provided in Section 8.6 hereof, no amendment
or modification of this Agreement shall be deemed effective unless and until
executed in writing by each party hereto.
8.6 All agreements and covenants contained herein are severable and
in the event any of them shall be held to be invalid by any competent court,
this Agreement shall
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be interpreted as if such invalid agreements or covenants were not contained
herein. Should any court or other legally constituted authority determine that
for any such agreement or covenant to be effective that it must be modified to
limit its duration or scope, the parties hereto shall consider such agreement or
covenant to be amended or modified with respect to duration and/or scope so as
to comply with the orders of any such court or other legally constituted
authority, and as to all other portions of such agreement or covenants they
shall remain in full force and effect as originally written.
8.7 All headings set forth in this Agreement are intended for
convenience only and shall not control or affect the meaning, construction or
effect of this Agreement or of any of the provisions hereof.
8.8 All controversies which may arise between the parties hereto
including, but not limited to, those arising out of or related to this Agreement
shall be determined by binding arbitration applying the laws of the State of
Delaware as set forth in Section 8.1 hereof. Any arbitration pursuant to this
Agreement shall be conducted in New York City before the American Arbitration
Association in accordance with its arbitration rules. The arbitration shall be
final and binding upon all the parties (so long as the award was not produced by
corruption, fraud or undue means) and the arbitrator's award shall not be
required to include factual findings or legal reasoning. Nothing in this
Section 8.8 will prevent either party from resorting to judicial proceedings if
interim injunctive relief under the laws of the State of New York from a court
is necessary to prevent serious and irreparable injury to one of the parties.
8.9 This Agreement may be executed via facsimile transmission
signature and in counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same instrument.
8.10 All matters to be determined by the Board pursuant to the terms
of this Agreement shall be determined by the members of the Board or any duly
authorized committee thereof.
8.11 The Company may withhold from any amounts payable under this
Agreement such federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of this 13th day of January, 1998.
___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
BEAZER HOMES USA, INC.
By:________________________________
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