Exhibit 10.22
CHANGE IN CONTROL AWARD AGREEMENT
THIS CHANGE IN CONTROL AWARD AGREEMENT, dated April 15, 2005 (the
"Agreement"), is made by and between Avatar Holdings Inc., a Delaware
corporation (the "Company") and Xxxxxxx X. Xxxx (the "Participant").
1. AWARD. Pursuant to the provisions of the Avatar Holdings Inc. 2005 Executive
Incentive Compensation Plan, as the same may be amended, restated, modified or
supplemented from time to time (the "Executive Plan"), the Committee (as defined
in the Executive Plan) hereby awards to the Participant, on the date hereof,
subject to the terms and conditions of the Executive Plan and subject further to
the terms and conditions and other provisions herein set forth, the Change in
Control Award if (i) a Change in Control Date (as defined below) shall occur and
(ii) the Performance Goal (as defined below) is satisfied as of the Change in
Control Date (as defined below).
2. CERTAIN DEFINITIONS.
(a) Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Executive Plan.
(b) Each reference contained in this Agreement to:
"Anniversary" shall mean, with respect to any date, the
annual recurrence of such date.
"Actual Gross Profit Amount" shall mean the Company's
cumulative Gross Profit during the Performance Period.
"Business Plan" shall mean the Company's business plan for
the period commencing on January 1, 2003 and ending on December 31,
2007, as submitted to the Compensation Committee at a meeting held on
March 3, 2005.
"Change in Control" shall mean any of the following events:
(a) a person or entity or group of persons or entities, acting in
concert, becomes the direct or indirect beneficial owner (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of securities of the Company representing ninety percent
(90%) or more of the combined voting power of the issued and
outstanding Common Stock; (b) the Board of Directors of the Company
approves any merger, consolidation or like business combination or
reorganization of the Company, the consummation of which would result
in the occurrence of the event described in clause (a) above, and
such transaction shall have been consummated; or (c) the Company
ceases to be engaged, directly or indirectly, and does not intend to
be engaged at any time in the foreseeable future, in any real estate
business. The date on which a Change in Control is consummated, with
respect to clauses (a) and (b), or occurs, with respect to clause
(c), is herein referred to as the "Change in Control Date."
"Change in Control Award" shall mean a cash payment equal
to two percent (2%) of the excess, if any, of (x) the Actual Gross
Profit Amount over (y) the Target Gross Profit Amount.
"Common Stock" shall mean common stock, par value $1.00 per
share, of the Company.
"Excluded Amounts" shall mean, with respect to a fiscal
year of the Company, as at any date of determination, an amount equal
to the dollar amount of any Gross Profit attributable to Harbor
Islands and the Rio Rico Excluded Properties for such fiscal year.
"Gross Profit" shall mean:
(A) with respect to any full fiscal year of the Company
during the Performance Period, the excess, if any, of (x) the sum of
(i) the amount set forth in the Company's audited Consolidated
Statements of Operations as set forth in the Company's annual report
on Form 10-K (the "Annual Income Statement") for such fiscal year
with respect to the line item "Net income (loss)" plus (ii) the
amount, if any, set forth in the Company's Annual Income Statement
for such fiscal year with respect to the line item "Income tax
expense (benefit)", to the extent that there is "Income tax expense"
less (iii) the amount, if any, set forth in the Company's Annual
Income Statement for such fiscal year with respect to the line item
"Income tax expense (benefit)", to the extent that there is "Income
tax (benefit)" plus (iv) the amount(s), if any, set forth in the
Company's Annual Income Statement for such fiscal year relating to
any income tax expense included in any income or (loss) attributable
to the discontinued operations and/or extraordinary items set forth
in the Income Statement less (v) the amount(s), if any, set forth in
the Company's Income Statement for such fiscal year relating to any
income tax (benefit) included in any income or (loss) attributable to
such discontinued operations and/or extraordinary items set forth in
the Income Statement, over (y) the Excluded Amounts for such fiscal
year; and
(B) with respect to any full fiscal quarter of the Company
during the Performance Period that does not constitute a portion of
full fiscal year for purposes of paragraph (A ) above, the excess, if
any, of (x) the sum of (i) the amount set forth in the Company's
unaudited Consolidated Statements of Operations for the three month
period of such fiscal quarter as set forth in the Company's quarterly
report on Form 10-Q (the "Quarterly Income Statement") for such
fiscal quarter with respect to the line item "Net income (loss)" plus
(ii) the amount, if any, set forth in the Company's Quarterly Income
Statement for such fiscal quarter with respect to the line item
"Income tax expense (benefit)", to the extent that there is "Income
tax expense" less (iii) the amount, if any, set forth in the
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Company's Quarterly Income Statement for such fiscal quarter with
respect to the line item "Income tax expense (benefit)", to the
extent that there is "Income tax (benefit)" plus (iv) the amount(s),
if any, set forth in the Company's Quarterly Income Statement for
such fiscal year relating to any income tax expense included in any
income or (loss) attributable to the discontinued operations and/or
extraordinary items set forth in the Quarterly Income Statement less
(v) the amount(s), if any, set forth in the Company's Quarterly
Income Statement for such fiscal quarter relating to any income tax
(benefit) included in any income or (loss) attributable to such
discontinued operations and/or extraordinary items set forth in the
Quarterly Income Statement, over (y) the Excluded Amounts for such
fiscal quarter.
"Harbor Islands" shall mean the development and/or sale of
the Company's property in Hollywood, Florida, generally known by the
Company as parcels 1, 8 and 9 at "Harbor Islands."
"Minimum Cumulative Gross Profit Level" shall mean that as
of the Change in Control Date the Actual Gross Profit Amount is
greater than the Target Gross Profit Amount.
"Performance Goal" shall mean the achievement of the
Minimum Cumulative Gross Profit Level for the Performance Period.
"Performance Period" shall mean the period commencing April
1, 2005 and ending on the Change in Control Date.
"Rio Rico Excluded Properties" shall mean those parcels of
land not suitable for development in accordance with the Company's
current Business Plan due to environmental factors located in the
Company's property in Rio Rico, Arizona, generally known by the
Company as "Rio Rico".
"Target Gross Profit Amount" shall mean $141,995,000.
3. TERMS AND CONDITIONS. The Change in Control Award evidenced by this Agreement
is subject to the following terms and conditions:
(a) The payment of performance-based compensation described herein is
contingent upon (i) the consummation of a Change in Control on or before
December 31, 2007, and (ii) t he achievement of the Performance Goal.
(b) Subject to Section 3(c) and Section 4 hereof, on or promptly
following the Xxxxx e in Control Date, the Participant shall be entitled to
receive the Change in Control Award if the Performance Goal is satisfied as of
the Change in Control Date.
(c) The Committee shall determine whether the Performance Goal has
been met as of the Change in Control Date and, (i) if it has, shall so certify
in writing and ascertain the amount of cash to be paid, if any, to the
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Participant and, (ii) if it has not, shall so certify in writing with a brief
explanation as to the methodology and calculation of the Committee in
determining that the Performance Goal has not been met. The Committee shall
determine the basis, methodology and calculation for, and any estimates used in,
determining the Gross Profit for the portion of the fiscal year immediately
preceding the Change in Control Date and following the most recent Annual Income
Statement or Quarterly Income Statement of the Company, as applicable and such
determination shall be final and binding on all parties, including the Company
and the Participant. Payments of cash, if any, pursuant to the Change in Control
Award shall be made on or promptly following the Change in Control Date.
4. LIMITATION ON COMPENSATION. Notwithstanding anything to the contrary herein,
the maximum payment of cash pursuant to the Change in Control Award to the
Participant hereunder shall be $3,000,000.
5. TERMINATION OF EMPLOYMENT.
(a) For purposes of this Agreement, the terms Cause, Without Cause,
Good Reason, Without Good Reason and Disability shall have the meanings ascribed
to such terms in the Participant's amended and restated employment agreement
with Avatar Properties, Inc. ("Avatar Properties"), dated as of the date hereof,
as amended or restated from time to time; provided, however, if the Participant
is no longer employed pursuant to such employment agreement, each such term
shall have the meaning ascribed to it in the employment agreement last in effect
which contains such defined term.
(b) If the Participant's employment with Avatar Properties is
terminated by Avatar Properties for Cause or by the Participant Without Good
Reason, in addition to any other consequences of such termination provided for
in this Agreement or any other agreement, notwithstanding Section 3 hereof,
Participant shall forfeit any right to cash payments pursuant to this Agreement
from and after the date of such termination.
(c) If the Participant's employment with Avatar Properties is
terminated by Avatar Properties Without Cause or by the Participant for Good
Reason, the Participant shall be entitled to receive such cash payments as would
otherwise be made pursuant to this Agreement as though the Participant's
employment had not been terminated.
(d) If the Participant's employment with Avatar Properties is
terminated due to the Participant's death or Disability, notwithstanding Section
3 hereof, the Participant shall be entitled to receive only that portion of any
cash payments otherwise payable pursuant to Section 3(c) hereof following such
termination, equal to the product of (x) a fraction (which in no event shall
exceed one (1)) the numerator of which is the number of completed whole months
elapsed after the first day of the Performance Period to the date of death or
Disability, as the case may be, and the denominator of which is the number of
whole months from the first day of the Performance Period until the Performance
Goal Test Date and (y) the amount of any cash payments that would have been
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payable pursuant to Section 3(c) hereof if the Participant remained an employee
of Avatar Properties through and including the Change in Control Date.
Any payments to the Participant (or the executor or administrator of
the deceased Participant's estate or the person or persons to whom the deceased
Participant's rights shall pass by will or the laws of descent or distribution,
as applicable) pursuant to this Section 5(d) shall be made on or promptly
following the Change in Control Date.
6. FORFEITURE UPON BREACH OF RESTRICTIVE COVENANTS. Notwithstanding anything to
the contrary set forth in this Agreement, if the Participant breaches any
provision relating to the Participant's covenant to keep information
confidential, not to compete, not to solicit or similar restrictive covenant
contained in the Participant's employment agreement or other agreement with the
Company or any of its subsidiaries or affiliates (the foregoing entities being
referred to herein collectively as the "Avatar Entities" and each as an "Avatar
Entity"), after the expiration of any notice and cure period, then in addition
to any other rights or remedies arising from or relating to such breach the
Participant shall forfeit any right to any cash payments that would otherwise
accrue pursuant to this Agreement on or after the date of such breach.
7. TAXES. Any cash payment pursuant to the Change in Control Award shall be net
of any amounts required to be withheld pursuant to applicable federal, state,
local and foreign tax withholding requirements. The Company shall have the right
to withhold the amount of such taxes from any other sums due or to become due
from the Company to the Participant as the Committee shall prescribe.
8. NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement does not confer upon the
Participant any right to continued employment by any of the Avatar Entities, nor
shall it interfere in any way with the right of the Participant's employer to
terminate the Participant's employment at any time for any reason or no reason.
9. NO OBLIGATION TO PURSUE PROJECTS. This Agreement shall in no way obligate the
Company to pursue any projects, developments or sales of any assets, and the
Company may limit, abandon or change any projects, developments or sales of any
assets at any time in its sole discretion and the Company shall have no
obligation to take any action or provide any financing with respect to any
projects, developments or sales of any assets.
10. UNSECURED CREDITOR STATUS; NO PARTNERSHIP. The Participant shall rely solely
upon the unsecured promise of the Company, as set forth herein, for payment
hereunder, and nothing herein contained shall be construed to give to or vest in
the Participant or any other person now or at any time in the future, any right,
title, interest, or claim in or to any specific asset, fund, reserve, account,
insurance or annuity policy or contract, or other property of any kind
whatsoever owned by the Company, or in which the Company may have any right,
title, or interest, nor at any time in the future. This Agreement is an
agreement to pay compensation for services provided by the Participant and is
not a partnership or joint venture and is not intended to create a partnership
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or joint venture between the Company and the Participant or any other person.
The Participant shall take no position inconsistent with this characterization.
11. ASSIGNMENT; SUCCESSORS.
(a) The Change in Control Award and any interest of the Participant
in such award may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of. Any attempt to transfer the Change in Control Award in
contravention of this Section 11(a) is void ab initio. The Change in Control
Award shall not be subject to execution, attachment or other process.
(b) The Company's rights and obligations hereunder may be assigned or
transferred by the Company to and may be assumed by and become binding upon and
may inure to the benefit of any affiliate of or successor to the Company. The
term "successor" shall mean, with respect to any Avatar Entity, any other
corporation or other business entity which, by merger, consolidation, purchase
of assets, or otherwise, acquires all or a material part of the assets of such
Avatar Entity.
(c) In the event of the Participant's death, the Participant's rights
and obligations hereunder shall be binding upon and inure to the benefit of the
Participant's heirs and legal representatives.
12. CONSTRUCTION. The Executive Plan and this Agreement will be construed by and
administered under the supervision of the Committee in the Committee's sole and
absolute discretion, and all determinations of the Committee will be final and
binding on the Participant.
13. NOTICES. Any notice required or permitted under this Agreement shall be
deemed given when delivered personally, or when deposited in a United States
Post Office, postage prepaid, addressed, as appropriate, (i) to the Participant
at the last address specified in the Participant's employment records, or such
other address as the Participant may designate in writing to the Company, or
(ii) to the Company, Avatar Holdings Inc., 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxx 00000, Attention: Chief Executive Officer, with a copy to the Company's
Corporate Secretary, or such other address as the Company may designate in
writing to the Participant.
14. FAILURE TO ENFORCE NOT A WAIVER. The failure of either party hereto to
enforce at any time any provision of this Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.
15. GOVERNING LAW. This Agreement shall be governed by and construed according
to the laws of the State of Delaware, without regard to the conflicts of laws
provisions thereof.
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16. INCORPORATION OF THE EXECUTIVE PLAN. The Executive Plan is hereby
incorporated by reference and made a part of this Agreement, and this Agreement
shall be subject to the terms of the Executive Plan.
17. ATTORNEYS' FEES. In the event that either party hereto commences litigation
against the other to enforce such party's rights hereunder, the prevailing party
shall be entitled to recover all costs, expenses and fees, including reasonable
attorneys' fees (including in-house counsel), paralegals' fees, and legal
assistants' fees through all appeals.
18. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be an original but all of which together shall represent one
and the same agreement.
19. MISCELLANEOUS. This Agreement cannot be modified or terminated orally. This
Agreement, the Executive Plan and the letter agreement, dated as of the date
hereof, among the Company, Avatar Properties and the Participant, contain the
entire agreement between the parties relating to the subject matter hereof. The
section headings herein are intended for reference only and shall not affect the
interpretation hereof.
(signature page follows)
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
AVATAR HOLDINGS INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
