XXXXXX, INC.
FORM 10-K
FOR FISCAL YEAR ENDED NOVEMBER 30, 1995
EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT AMENDMENT
BETWEEN THE COMPANY AND XXXXXXX X. XXXXXXXXX
DATED NOVEMBER 21, 1995
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as
of this 21st day of November, 1995 by and between Xxxxxx, Inc. (the
"Employer" or the "Company"), a New Jersey corporation which
maintains its principal executive offices at 000 Xxxxx Xxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000, and Xxxxxxx X. Xxxxxxxxx (the
"Executive"), an individual residing at 000 Xxxxxx Xxxxx, Xxxx
Xxxxx, Xxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the acquisition, design,
development, construction and marketing of residential real estate
including, without limitation, residential housing units; and
WHEREAS, the Executive has had extensive experience in the
field of residential and commercial real estate development and
other related areas in a management capacity; and
WHEREAS, the Employer desires to provide for the employment of
the Executive as the President and Chief Executive Officer of the
Company and to serve as the Chairman of the Board of Directors of
the Company (the "Board") pursuant to the terms and conditions of
this Agreement since the Employer believes that the Executive's
business and technical experience, skill, acumen, and expertise
will enhance the business and improve the profitability of the
Company; and
WHEREAS, the Board has determined that it is in the best
interest of the Company to provide for the employment of the
Executive as President, Chief Executive Officer and Chairman of the
Board of the Company and believes that this Agreement will
reinforce and encourage the attention and dedication of the
Executive to the Company as the key member of the Company's
management team.
NOW, THEREFORE, in consideration of the representations,
covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Employment.
1.1 Term. The term of this Agreement shall commence on
November 21, 1995 and end on November 30, 1998 (the "Term"), unless
further extended or sooner terminated as hereinafter provided. On
November 30, 1997, the Term of the Executive's employment shall be
automatically extended one (1) additional year unless, on or before
such date, the Employer shall have delivered to the Executive or
the Executive shall have delivered to the Employer written notice
that the Term of the Executive's employment hereunder will not be
extended. The word "Term" as defined and used herein shall include
any additional one (1) year extension period unless otherwise
indicated.
1.2 Powers, Duties and Responsibilities. For the Term of
this Agreement, the Employer hereby employs the Executive, and the
Executive hereby accepts employment with the Employer, to render
service as President, Chief Executive Officer and Chairman of the
Board of the Company, with such powers, duties and responsibilities
consistent with the position of President, Chief Executive Officer
and Chairman of the Board as provided for in the Employer's Bylaws
and as otherwise may from time to time be determined by the Board
and subject to the rights of the shareholders of the Company. The
Executive agrees to devote the necessary working time to the
Employer to accomplish the Company's goals and to diligently
perform all duties and fulfill all responsibilities incident to his
employment in a businesslike and efficient manner. The Executive
shall be responsible for each facet of the Employer's business
operations, and the Executive will report directly to the
Employer's Board.
The Executive agrees that he will not become involved in any
activity outside of the business of the Company that would
interfere with the performance of his duties hereunder or any
activity that would be inimical to or contrary to the best
interests of the Employer.
2. Compensation and Benefits.
2.1 Salary. During the period of the Executive's
employment hereunder, the Executive shall receive a salary of Two
Hundred and Fifty Thousand Dollars ($250,000) per annum paid in
accordance with the Employer's normal payroll practices (the "Base
Compensation"). The payment of such Base Compensation to the
Executive shall not prevent the Executive from participating in any
other compensation or benefit plan provided by the Employer, unless
excluded by the terms of any such plan. No other compensation,
benefit, or payment made by the Employer hereunder shall in any way
limit or reduce the obligation of the Employer to pay the
Executive's Base Compensation hereunder. Base Compensation as
defined and used herein shall include any increase thereto pursuant
to an action of the Board or the Compensation Committee of the
Board (the "Compensation Committee").
2.2 Bonus Compensation. The Executive shall be entitled to
receive bonus compensation pursuant to the Executive's
participation in the Xxxxxx, Inc. Incentive Compensation Plan
("Incentive Plan"). The Executive shall be eligible to participate
in any other bonus compensation plan or arrangement otherwise
provided by the Employer to senior level executives of the Company.
In each fiscal year during the Term of this Agreement, the
Executive shall be entitled to receive bonus compensation under the
Incentive Plan in an amount which is no less than one-half (1/2) of
the average percentage that all other bonus awards to eligible
Incentive Plan participants are of the respective participant's
base salary compensation for the relevant fiscal year; provided,
however, that the Executive may not receive bonus compensation for
a particular fiscal year under the Incentive Plan that is in excess
of thirty percent (30%) of the designated bonus pool provided under
the Incentive Plan (the "Bonus Pool") for that same fiscal year.
The Executive may receive bonus compensation that exceeds one
hundred percent (100%) of his Base Compensation under the Incentive
Plan for a particular fiscal year and the Employer, acting through
its Board or a committee thereof, may, in its discretion, award
bonus compensation to the Executive in excess of the minimum level
specified in the preceding sentence, subject to the above described
limit of thirty percent (30%) of the Bonus Pool for that fiscal
year.
2.3 Benefit Plans. The Executive will be entitled to
participate in all Employer benefit plans available, or hereafter
made available, to senior level executives of the Employer. The
Executive will be eligible to participate in any existing stock
option plan or any stock option plan or arrangement hereafter
adopted by the Employer.
For purposes of eligibility for participation or vesting in
the benefits provided by any Employer sponsored benefit plan, the
Executive will receive credit for his prior service with Company as
President and Chief Executive Officer. Except as provided herein
or required by the terms of an Employer sponsored benefit plan,
nothing paid to the Executive under any such plan or arrangement
presently in effect or made available in the future shall be deemed
to be in lieu of the Base Compensation payable to the Executive
pursuant to Section 2.1 of this Agreement.
2.4 Relocation Expenses. The Employer agrees to reimburse
Executive the expenses Executive incurs to relocate his family and
establish a secondary residence in New Jersey in an amount not to
exceed Forty-Five Thousand ($45,000) Dollars, which shall include
but not be limited to travel expenses and temporary lodging.
2.5 Perequisites. During the Term of this Agreement, the
Executive will be entitled to and the Employer will provide a
monthly automobile allowance of Six Hundred Dollars ($600) to be
applied towards the purchase or lease of an automobile suitable to
the Executive's position with the Employer. The Employer shall
reimburse the Executive for all expenses related to fuel, oil,
tolls, maintenance and repairs for any such automobile.
The Executive shall be entitled to receive any perquisites
available, or hereafter made available, to senior level executives
of the Company.
2.6 Vacation. The Executive shall be entitled to fifteen
(15) days paid vacation per annum.
3. Termination. The Executive's employment by the Employer
hereunder may be terminated under the following conditions:
3.1 Death. The Executive's employment hereunder shall
terminate immediately upon his death, and the Employer shall pay to
the Executive's designated beneficiary, or if he leaves no
designated beneficiary to his estate, any Base Compensation which
has been earned but is unpaid and any unreimbursed expenses or
other unpaid benefits due the Executive hereunder at the time of
his death.
3.2 Disability. In the case of any disabling illness or
injury, whether physical or mental (the "Disability"), the
Executive shall submit to all reasonable requests by the Employer
to permit physical examination by experts retained by the Employer.
If following such examinations by the Employer's experts and the
Executive's experts the Board in its sole discretion determines
that the Executive is unable to perform the duties required of him
under this Agreement, or if the Executive fails for any reason to
perform the duties required of him under this Agreement for a
period of one hundred and eighty (180) consecutive days or a total
of two hundred and seventy (270) days, whether or not such days are
consecutive, in any three hundred and sixty (360) day period, the
Employer may terminate, without written notice and upon the
expiration of any waiting period to the Executive's qualification
for long-term disability benefits under any applicable disability
income plan, the Executive's employment pursuant to this Agreement,
regardless of whether the existing carrier concurs that the
Executive is permanently disabled and entitled to benefits under
any such plan. The Board's determination regarding the Disability
of the Executive shall be binding upon the Executive. Upon
termination of the Executive for Disability, the Executive shall
receive the Severance Compensation and shall be entitled to the
Severance Benefits as defined in Section 3.7 hereunder.
3.3 Termination for Just Cause by Employer. In the event
the Executive is subject to a final, unappealable adjudication by
a court of competent jurisdiction for the commission of a felony in
connection with the performance of his duties as an officer of the
Employer that directly results in a personal financial benefit to
the Executive, the Employer may at any time without notice
terminate the Executive's employment hereunder, and the Executive
shall have no right to receive any Base Compensation, or benefits
of any kind whatsoever, except those benefits which are vested or
otherwise owned by the Executive, on and after such date of
termination. The Executive shall not receive any bonus or
incentive compensation, pursuant to Section 2.2 of this Agreement,
for the year of termination if such termination is by the Employer
for just cause.
3.4 Termination without Cause by Employer. The Employer
may at any time, by written notice issued in accordance with
Section 9 hereunder which establishes the date of termination of
this Agreement, terminate the Executive's employment under this
Agreement without cause. Upon termination without cause by the
Employer, the Executive is entitled to receive from the Employer
any earned but unpaid Base Compensation as well as receive from the
Employer any unreimbursed expenses or other unpaid benefits owed as
of the date of termination. Further, in the event of a termination
without cause by the Employer, the Executive is entitled to the
Severance Compensation and Severance Benefits as defined in Section
3.7 hereunder.
3.5 Termination without Cause by the Executive. The
Executive may terminate this Agreement without specific cause or
reason upon ninety (90) days written notice to the Employer. The
Employer may at any time, in its sole discretion, shorten or
eliminate the ninety (90) day notice period by written notice to
the Executive. The Executive shall receive no further Base
Compensation, other than amounts earned but unpaid, nor benefits of
any kind, other than amounts to which the Executive is entitled to
reimbursement and those benefits which are vested or otherwise
owned by the Executive, following the ninety (90) day notice
period, or such abbreviated period to the extent it is shortened or
eliminated by the Employer as provided above. The Executive shall
not be entitled to bonus or incentive compensation, pursuant to
Section 2.2 of this Agreement, for the year of termination if such
termination is by the Executive without cause. For purposes of
this Agreement, termination by the Executive "without cause" shall
mean termination for any reason other than death, disability,
retirement with the Employer's consent, or termination by the
Executive for just cause as defined in Section 3.6 hereunder.
During the ninety (90) day notice period, or any such abbreviated
period, the Executive shall continue to faithfully and diligently
perform all duties assigned to him by the Board.
3.6 Termination for Just Cause by the Executive. The
Executive may terminate this Agreement upon ninety (90) days
written notice to the Employer in the event that (a) the Board
fails to reelect the Executive as President, Chief Executive
Officer and Chairman of the Board of the Company during the Term of
this Agreement; (b) the Board significantly reduces the nature or
scope of the authorities, powers, functions or duties attached to
the office of the President, Chief Executive Officer or Chairman of
the Board of the Company; (c) the Employer breaches any material
covenant under this Agreement, and such breach is not cured within
forty-five (45) days of the issuance of written notice by the
Executive to the Employer identifying the breach; or (d) the
Employer consents to the Executive's retirement. Upon termination
at the conclusion of the ninety (90) day period, the Executive is
entitled to receive from the Employer any earned but unpaid Base
Compensation and any unreimbursed expenses or other unpaid benefits
owed as of the date of termination. The Employer may shorten or
eliminate the ninety (90) day notice period by providing written
notice to the Executive. Further, the Executive shall be entitled
to the Severance Compensation and Severance Benefits as defined in
Section 3.7 hereunder. Except for Section 3.6(d), an election by
the Executive to terminate this Agreement for just cause shall not
be deemed a voluntary termination of employment by the Executive
for the purpose of this Agreement or any plan or practice of the
Employer.
3.7 Severance Compensation and Severance Benefits.
Pursuant to this Agreement, severance compensation and benefits
shall mean: (a) within ten (10) calendar days of the date of
termination, a single cash payment in an amount equal to one year
payment of the Base Compensation; (b)(i) within ten (10) calendar
days of the date of termination, payment for accrued and unused
vacation for the year of termination; and (b)(ii) payment of the
Executive's prorated bonus or incentive compensation, if any,
pursuant to Section 2.2 of this Agreement, for the year of
termination in accordance with the ordinary payment procedures
under and other terms and provisions of the Incentive Plan or any
other bonus compensation plan (payments pursuant to 3.7(a) and
3.7(b) are collectively, the "Severance Compensation"); (c)(i) to
the extent that the Executive is insurable, the Employer shall
reimburse the Executive the cost of COBRA benefits, other than long
term disability coverage, for the Executive and his family for a
period of eighteen (18) months following the date of termination,
subject to any limitation on the provision of such benefits
established by then existing law; provided, however, that if the
Employer is not able to provide coverage under COBRA for any
reason, including, without limitation, that the Executive is deemed
uninsurable, the Employer shall make a lump-sum cash payment to the
Executive in an amount equal to the Employer's cost for such COBRA
benefits over such eighteen (18) month period if such benefits had
been available for the Executive and his family; and (c)(ii)
Executive shall have the right to convert any other Employer
sponsored benefit plan to the extent provided for by the terms of
such plan, but the Employer shall have no obligation to make
payments in connection with any such conversion (the benefits
described in Section 3.7(c) are collectively, the "Severance
Benefits").
In the event the Employer issues a notice of non-extension of
this Agreement to the Executive in accordance with Section 1.1 of
this Agreement, the Executive shall be entitled to the Severance
Compensation and Severance Benefits in accordance with the terms
and at the times provided in this Section 3.7. In the event the
Executive issues a notice of non-extension of this Agreement to the
Employer in accordance with Section 1.1 of this Agreement, the
Executive shall not be entitled to the Severance Compensation and
Severance Benefits provided in this Section 3.7.
4. Covenants of the Executive.
4.1 Covenants Against Competition. The Executive
acknowledges that (i) the principal business of the Employer is the
acquisition, design, development, construction and marketing of
residential real estate including residential housing units; (ii)
the Employer's business is conducted in various geographic regions
of the United States of America; (iii) the Executive's work for
the Employer will bring him and will continue to bring him into
close contact with many trade secrets of and confidential
information concerning the Employer, its subsidiaries and its
affiliates which are not readily available to the public; and
(iv) the covenants in this Section 5 are essential to protect the
business and goodwill of the Employer. In order to induce the
Employer to enter into this Agreement, the Executive covenants and
agrees that:
4.1.1 Non-Compete. For the Term of this Agreement, and
for a period of twelve (12) months following termination of the
Executive's employment (the "Restricted Period"), other than for
just cause by the Employer or without cause by the Executive, the
Executive shall not, in any state in which the Employer is actively
engaged in the business of the Employer: (i) compete with the
Employer by engaging in the Employer's business of acquiring,
designing, developing, constructing and marketing residential real
estate, including, without limitation, residential housing units;
or (ii) become interested in or engaged in the Employer's business
of acquiring, designing, developing, constructing and marketing
residential real estate, directly or indirectly, as an individual,
partner, shareholder, officer, director, principal, agent, senior
level management employee, trustee, consultant or in any other
relationship or capacity. Notwithstanding the foregoing, the scope
of this Section 4.1.1 shall not be deemed to include the states of
California, Illinois, Pennsylvania or Florida with the exception of
the Orlando metropolitan area and any other county in Florida in
which the Employer currently owns property or has executed a
contract to purchase land and New Jersey with the exception of
Morris, Warren, Hunterdon, Middlesex, Somerset, Mercer, Monmouth
and Burlington counties.
4.1.2 Corporate Opportunities. During the Restricted
Period, the Executive shall not acquire any ownership, creditor's,
beneficial or pecuniary interest, or become a director, officer or
significant equity holder in any entity that acquires any
ownership, creditor's, beneficial, or pecuniary interest, in any
residential real estate development project of the Employer or any
of its subsidiaries or other affiliated entities.
4.1.3 Confidential Information. During and after the
Restricted Period, the Executive shall keep secret and retain in
strictest confidence, and shall not use for the benefit of himself
or others, except in the course of performing his duties for the
Employer, all proprietary and/or confidential matters of the
Employer, its subsidiaries and its affiliates, including, without
limitation, details of contracts, pricing policies, operational
methods, marketing plans and strategies, real estate acquisition,
development and design techniques, projects and plans, business
acquisition plans, new personnel acquisition plans, and other
business affairs of the Employer and its subsidiaries and other
affiliated entities learned by the Executive heretofore or
hereafter; provided, however, the Executive shall not be restricted
with respect to use of confidential information that (i) was
rightfully known to Executive prior to disclosure by Employer; (ii)
is or becomes public knowledge through no action or default on the
part of the Executive; (iii) is disclosed to the Executive by a
third party, provided that the third party has the lawful right to
make such disclosure; (iv) is approved by the Board in writing for
disclosure to specified third parties; or (v) is required to be
disclosed by Executive pursuant to a court order.
4.1.4 Nonsolicitation of Employees. During the
Restricted Period, the Executive shall not, directly or indirectly,
hire, solicit or encourage any employee to leave the employment of
the Employer or any of its subsidiaries or other affiliated
entities.
4.1.5 Property of the Employer. All memoranda, notes,
lists, records and other documents, and all copies thereof,
including but not limited to such items stored in computer
memories, on microfilm or by any other means, made or compiled by
or on behalf of the Executive, or made available to the Executive,
concerning the business of the Employer or any of its subsidiaries
or other affiliated entities are and shall be the Employer's
property and shall be delivered to the Employer promptly upon the
termination of the Executive's employment with the Employer or at
any other time on request. The Executive shall be entitled to
copies of any of the materials referenced herein, at no cost and
expense to the Executive, to the extent necessary to (i) defend any
lawsuit; (ii) respond to any inquiry from any court or governmental
agency related to such materials; (iii) respond to any tax audits;
or (iv) to respond to any other inquiries which require Executive
to have access to such materials.
4.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach, of any of the provisions
of Section 4.1, the Employer shall have the rights and remedies set
forth in this Section 4.2 of this Agreement, each of which shall be
independent of the other and severally enforceable, and all of
which rights and remedies shall be in addition to, and not in lieu
of, any other rights and remedies available to the Employer in law
or in equity.
4.2.1 Specific Performance. The Employer shall
have the right and remedy to have the covenants of this Section 4
specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened
breach will cause irreparable injury to the Employer and that money
damages will not provide adequate remedy to the Employer.
4.2.2 Accounting. The Employer shall have the
right and remedy to require the Executive to account for and pay
over to the Employer all compensation, profits, monies, accruals,
increments or other benefits (collectively, the "Benefits") derived
or received by the Executive as the result of any transactions
constituting a breach of any of the covenants of Section 4, and the
Executive shall account for and pay over such Benefits to the
Employer.
4.3 Severability of Covenants. If any court determines
that any of the covenants of Section 4, or any part thereof, is
invalid or unenforceable, the remainder of the covenants shall not
thereby be affected and shall be given full effect, without regard
to the invalid portions.
4.4 Blue-Pencilling. If any court determines that any
of the covenants of Section 4, or any part thereof, is
unenforceable because of the duration or geographic scope of such
provision, such court shall have the power to reduce the duration
or scope of such provision, as the case may be, and, in its reduced
form, such provision shall then be enforceable and shall be
enforced.
5. Binding Effect. The respective obligations of the
Employer and the Executive under this Agreement shall inure to the
benefit of and be binding upon the Employer and the Executive and
the respective successors and assigns of the Employer. This
Agreement shall be assignable by the Employer but not by the
Executive. As used herein, the term "successors and assigns" shall
include any entity which acquires all or substantially all of the
assets and businesses of Employer whether by purchase, merger,
consolidation or otherwise.
6. Applicable Law. The Agreement shall be interpreted and
construed in accordance with the laws of the State of New Jersey.
7. Indemnification. The Employer will defend and indemnify
the Executive as provided for in the Employer's Bylaws, regardless
of any subsequent amendment, which may restrict or limit the
Executive's right to indemnification as set forth in the Bylaws, or
repeal of the relevant Bylaw provisions. Further, the Executive
shall be covered by any directors' and officers' insurance policy
(the "D&O Policy") provided by the Employer for its officers and
directors to the fullest extent that coverage pursuant to any such
D&O Policy is provided for the Employer's other officers and
directors. Following the termination of the Executive's employment
with the Employer, the Executive shall be covered by any then
existing or subsequently obtained D&O Policy to the same extent
that any such D&O Policy provides coverage for officers or
directors of the Employer. Following termination of his employment
with the Employer, the Executive will be entitled to request and
obtain an endorsement or other customary form of confirmation from
the carrier of any such D&O Policy that the Executive is covered as
a former officer or director of the Employer.
8. Representations and Warranties of the Employer. The
Employer represents and warrants that the execution of this
Agreement by the Employer has been duly authorized by all required
resolutions of its Board and/or Board committees.
9. Notices. For the purposes of this Agreement, notices,
demands and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly issued
when hand delivered, or when dispatched to any overnight delivery
service, or when deposited for mailing in a United States mailbox
or at a United States Post Office if sent postage prepaid and
return receipt requested by United States Certified or Registered
Mail.
If to the Executive:
Xxxxxxx X. Xxxxxxxxx
000 Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
If to the Employer:
Xxxxxx, Inc.
000 Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
or such other address as any party may have furnished to the other
in writing in accordance herewith.
10. Entire Agreement. This Agreement sets forth the entire
understanding between the Employer and Executive with respect to
the employment of the Executive by the Employer, and it supersedes
all prior and contemporaneous, written, oral, express and implied
communications, agreements and understandings between the Executive
and the Employer, its subsidiaries and its other affiliated
entities. In the event that any term, or condition or provision of
this Agreement varies from, or is in any way dissimilar to or a
conflict with, any term, condition or provision of any of the
Employer's benefit plans or any other agreement between the
Employer and the Executive, the terms, conditions and provisions of
this Agreement will control.
11. Amendment. No provision of this Agreement may be
amended, modified, waived or discharged unless such waiver,
amendment, modification or discharge is approved by the Board, or
a committee of the Board having appropriate authority, and agreed
to in writing signed by both the Executive and the Employer.
12. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in
counterparts, each of which will constitute an original, but all of
which together constitute one and the same Agreement.
14. Effective Date. The parties hereto agree that this
agreement is effective and legally binding as of November 21, 1995.
15. Stock Options. Subject to the condition as to
shareholder approval set forth below, the Executive shall be
granted options to acquire 500,000 shares of the Employer's Common
Stock under a new stock option plan which shall be adopted and
approved by the Employer's Board of Directors. The grant of such
options shall be conditioned upon the approval of such plan by the
shareholders of the Employer and the exercise of such options shall
be conditioned upon registration of the shares underlying such
options under the Securities Act of 1933, as amended. The exercise
price of such options, all of which shall be fully vested upon
grant, shall be equal to the fair market value of the Common Stock
of the Employer on the date of the adoption of the plan by the
Employer's Board of Directors.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
WITNESS:
__________________________ /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
ATTEST: XXXXXX, INC.
/s/Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxxxx,
Assistant Secretary Senior Vice President
