Contract
Exhibit
10.1
This
Separation Agreement (the “Agreement”) is made by and between Xxxxxx
Xxxxxxxxxxxxx (“Executive”) and M/I Homes, Inc., an Ohio corporation (the
“Company”).
WHEREAS,
Executive has been employed by the Company as
its
Chief
Operating Officer (and in this capacity holds other various positions with
the
Company and its affiliates), has held various positions as a director,
officer
and/or manager with the Company’s subsidiaries and affiliates, is a trustee of
the M/I Homes Foundation (the “M/I Foundation”), and is a member of the Board of
Directors of the Company (the “Board”);
WHEREAS,
the parties acknowledge that Executive’s employment with the Company will
terminate, effective July 21, 2006 (the “Separation Date”); that he has resigned
from his position as a trustee of the M/I Foundation and from all positions
as a
director, officer and/or manager of each of the Company’s subsidiaries and
affiliates effective as of the Announcement Date; and that he will resign
his
position as a member of the Board effective as of the Separation
Date;
WHEREAS,
the parties wish to define the terms and conditions of Executive’s separation
from service with the Company;
NOW,
THEREFORE, in exchange for and in consideration of the following mutual
covenants and promises, the undersigned parties, intending to be legally
bound,
hereby agree as follows:
1. Separation.
The
Company and
Executive publicly
announced Executive’s
separation on June 15, 2006 (the “Announcement Date”), and the parties agree
that Executive shall formally separate from service
with the
Company and each of its subsidiaries and affiliates effective as
of the
Separation Date and shall resign from the Board effective as of the Separation
Date. On the Separation Date, (a) Executive’s employment with the Company and
all further compensation and remuneration of Executive and all eligibility
of
Executive under Company benefit plans shall terminate, except as otherwise
provided in this Agreement or by applicable law and (b) Executive shall
resign
from the Board. Executive shall receive all compensation and benefits to
which
he is entitled as an employee of the Company until the Separation
Date.
2. Separation
Payments and Benefits.
In
connection with his separation of service from the Company, Executive and
Company hereby agree to specific terms and obligations:
(a) Executive
shall receive severance pay in the gross amounts as follows:
(i)
$974,000 (which is equal to the Executive’s average base salary for the years
2003, 2004 and 2005, times two); plus
(ii)
$3,334,000 (which is equal to the Executive’s average annual bonus for the years
2003, 2004 and 2005, times two); plus
(iii)
an
amount equal to the pro rata portion of the 2006 Annual Bonus to which
Executive
would have been entitled had he remained employed by the Company through
the
date such 2006 Annual Bonus is paid, based on the total number of days
from
January 1, 2006 through the Separation Date divided by 365, which amount
shall
be due if, and only if, Executive would have received his 2006 Annual Bonus
if
he had remained employed by the Company through the date such 2006 Annual
Bonus
would have been paid.
The
foregoing amounts to total severance of $4,308,000 plus the amount, if
any,
calculated pursuant to clause (iii) above (collectively, the “Severance”). In
addition, Executive shall be entitled to keep the compensation he received
from
the Announcement Date through the Separation Date. The Severance is intended
to
compensate Executive for his long and distinguished service to the Company.
The
amounts described in clauses (i), (ii) and (iii) above shall be paid to
Executive, as follows:
(x)
Immediate
Severance.
The
Company shall pay Executive $2,154,000 ratably beginning on the Effective
Date
and ending on January 31, 2007 in accordance with the Company’s ordinary payroll
practices in effect during such period.
(y)
Deferred
Severance.
The
Company shall pay Executive $2,154,000 in equal monthly installments beginning
February 1, 2007 and ending on July 1, 2007.
(z)
2006
Annual Bonus.
The
amount, if any, calculated pursuant to clause (iii) above shall be paid
on the
date(s) the 2006 Annual Bonus, if any, would have been paid to Executive
had
Executive remained employed by the Company.
The
gross
amount of the Severance shall be reduced by ordinary and customary tax
withholdings as required by law.
(b) Within
10
days following the Effective Date (as that term is defined in paragraph
20
herein), the Company shall pay Executive a lump sum payment of $22,000,
less
applicable taxes, to cover the costs of Executive’s medical and dental insurance
benefits for Executive and Executive’s eligible dependents, if any, under the
Consolidated Omnibus Budget Reconciliation Act (COBRA).
(c) With
respect to Executive’s 48,000 vested stock options, the Company will, upon the
Effective Date (as that term is defined in paragraph 20), treat the Executive
as
retired for purposes of the 1993 Stock Incentive Plan, as amended, and
Executive
shall have one year from the Effective Date to exercise such vested stock
options. Executive acknowledges that he has no ownership interest or exercisable
right in or to the 184,000 shares of unvested stock options held by him
prior to
the Separation Date.
(d) Executive
will be deemed retired as of the Effective Date for purposes of Executive
Deferred Compensation under the Company’s Executive Deferred Compensation Plan,
as amended. The Executive Deferred Compensation will be distributed on
dates
designated by the Executive, subject to the terms and conditions of such
plan.
The amount of the Executive Deferred Compensation will be determined by
the
market value on the distribution dates.
(e) Executive
is entitled to any amounts which Executive had previously deferred (including
any interest earned or credited thereon), pursuant to the Company’s 401(k) Plan
(payable in accordance with the terms of the plan) and the Company’s
Nonqualified Savings and Supplemental Plan (payable no earlier than the
date
that is six (6) months and one day after the Separation Date (or, if earlier,
his date of death), and no later than ten (10) business days
thereafter).
3. Automobile.
In
addition to the consideration described in Paragraph 2 above, the Company
agrees
to buy out the lease (dated December 30, 2004) of the Company automobile
currently used by Executive and held by Huntington Leasing Company, valued
at
approximately $54,000, and title in said automobile shall be transferred
to
Executive.
4. No
Mitigation.
None
of
the foregoing benefits provided in Paragraphs
2 or 3 shall (i) be subject to any mitigation obligation on Executive’s part, or
(ii) be terminated or diminished if Executive should accept other employment
after
the
Separation Date, otherwise in accordance with this Agreement.
5. Totality
of Payments.
Executive agrees that he is not entitled to any payments, compensation,
stock
options, deferred compensation, benefits, or remuneration of any kind from
the
Company, other than what he is receiving through this Agreement, on
account of any matter, cause or thing whatsoever which has occurred prior
to the
date of his signing this Agreement.
6. Securities
and Tax Considerations.
(a) Internal
Revenue Code Section 409A.
Notwithstanding
anything in this Agreement to the contrary, the parties hereby agree that
it is
the intention that any payments or benefits provided under this Agreement
comply
in all respects with Section 409A of the Internal Revenue Code of 1986,
as
amended (“Code”) and any guidance issued thereunder. In addition, in the event
that additional guidance with respect to Section 409A of the Code becomes
available, the Company agrees that, upon Executive’s reasonable request, it will
amend this Agreement solely to the extent necessary and appropriate to
avoid
adverse tax consequences pursuant to Section 409A of the Code so long as
such
requested amendment does not adversely affect the Company.
(b) The
Company agrees to cooperate as reasonably necessary and appropriate with
respect
to any equity compensation instructions issued by Executive’s broker or
authorized representative, subject in all respects to applicable federal,
state,
local or self regulatory entity securities laws, rules and/or
regulations.
7. Executive
Covenants.
(a) Unauthorized
Disclosure.
Executive shall not, during the Severance
Term
and
thereafter, make any Unauthorized Disclosure. For purposes of this Agreement,
“Unauthorized Disclosure” shall mean disclosure by Executive
without the prior written consent of the Board
or the
Chief Executive Officer of the Company to any person, of
any
confidential information relating to the business
or
prospects
of
the
Company including, but not limited to,
any
confidential information with respect to any of the Company’s customers,
products, methods of distribution, strategies, business and marketing
plans
and
business
policies and practices, litigation strategies or defenses, and plans for
new
business concepts,
except
(i) to the extent disclosure is or may be required by law, by a court of
law or by any governmental agency or other person or entity with apparent
jurisdiction to require him to divulge, disclose or make available such
information or (ii) in confidence to an attorney or other advisor for the
purpose of securing professional advice concerning Executive’s personal
matters
provided
such
attorney
or other advisor agrees to observe these confidentiality provisions.
Unauthorized Disclosure
shall
not include the use or disclosure by Executive, without consent, of any
information known generally to the public or
known
within the Company’s trade or industry (other
than as a result of disclosure by him
in
violation of this Paragraph 7(a)).
This confidentiality covenant has no temporal, geographical or territorial
restriction.
(b) Non-Competition.
During
the Non-Competition
Period described below,
Executive shall not, directly or indirectly, without the prior written
consent
of the Company, which consent shall not be unreasonably withheld, own,
manage,
operate, join, control, be employed by, or participate in the ownership,
management, operation or control of (as a stockholder, partner, or
otherwise)
any
corporation, limited liability company, partnership, joint venture, trust
or
other entity that engages in the building of more than 100 residential
housing
units per year, determined by closings, within any of the Metropolitan
Statistical Areas as the Company
or any
of its affiliates is now or at such time engaged in homebuilding
operations, provided,
however,
that the “beneficial ownership” (as
that
term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) by
Executive,
either
individually or as a member of a “group”
for
purposes
of
Section
13(d)(3)
under
the Exchange
Act and the
regulations
promulgated thereunder,
of not
more than two percent (2%) of the voting stock of any of
such
entity that is publicly
held shall
not
be a violation of this
Agreement.
(c) Non-Interference.
During
the Non-Competition
Period
described below, Executive shall not, either directly or indirectly,
alone
or in
conjunction with another person,
interfere with or harm, or
attempt
to interfere with or harm, the relationship of the Company, its subsidiaries
and/or affiliates, with any person who at any time was an employee, customer
or
supplier of the Company, its subsidiaries and/or affiliates or otherwise
had a
business relationship with the Company, its subsidiaries and/or
affiliates.
For the
avoidance of doubt, this Paragraph 7(c) does not prohibit Executive from
employing his current executive assistant at any time following the Separation
Date.
(d) Non-Competition
Period.
For
purposes of this Agreement, the “Non-Competition
Period”
means
the one-year period immediately
following the Announcement Date.
(e) Remedies.
Executive agrees that any breach of the terms of this Paragraph
7 or of
Paragraph 9 of this Agreement,
would
result in irreparable injury and damage to the Company for which the Company
would have no adequate remedy at law;
Executive
therefore also agrees that in the event of said
breach or any threat
of
breach,
the
Company shall be entitled to an immediate injunction and restraining order
to
prevent such
breach
and/or threatened breach and/or continued breach by Executive and/or any
and all
persons and/or entities acting for and/or with Executive, without
having to prove damages, in
addition to any other remedies to which the Company may be entitled at
law or in
equity. The terms of this Paragraph
7(e)
shall
not prevent the Company from pursuing any other available remedies for
any
breach or threatened breach hereof,
including, but not limited, to the recovery of damages from Executive.
Executive
and the Company further agree that the provisions of Paragraphs 7(b) and
7(c)
are reasonable and that the Company would not have entered into this Agreement
but for the inclusion of such covenants herein. Should a court or arbitrator
determine, however, that any provision of the covenants is unreasonable,
either
in period of time, geographical area, or otherwise, the parties hereto
agree
that the covenants
should
be interpreted and enforced to the maximum extent which such court or arbitrator
deems reasonable. The provisions
of this Paragraph shall survive any termination of this Agreement, and
the
existence of any claim or cause of action by Executive against the Company,
whether predicated on this Agreement or otherwise, shall not constitute
a
defense to the enforcement by the Company of the covenants and agreements
of
Paragraph 7; provided, however, that this paragraph shall not, in and of
itself, preclude Executive from defending himself against the enforceability
of
the covenants and agreements of Paragraph 7. Nothing
in this
paragraph shall preclude the Company either from asserting any claim for
damages
it may have for a violation of Paragraph 7 or from seeking equitable relief
to
enjoin Executive from violating Paragraph
7.
8. Indemnification.
(a) The
Company agrees that if Executive is made a party, or is threatened to be
made a
party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a “Proceeding”), by reason of the fact that he
is or was a director, officer or employee of the Company or is or was serving
at
the request of the Company as a director, officer, manager, member, employee
or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
or
not the basis of the Proceeding is Executive’s alleged action in the course of
serving as a director, officer, manager, member, employee or agent, Executive
shall be indemnified and held harmless by the Company to the fullest extent
legally permitted or authorized by the Company’s certificate of incorporation or
bylaws or resolutions of the Company’s Board or, if greater, by the laws of the
State of Ohio, against all cost, expense, liability and loss (including,
without
limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or other
liabilities or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by Executive in connection therewith, and
such
indemnification shall continue as to Executive even if he has ceased to
be a
director, officer, manager, member, employee or agent of the Company or
other
entity and shall inure to the benefit of Executive’s heirs, executors and
administrators; provided, however, that nothing herein is intended to indemnify
Executive for any acts committed by Executive which unequivocally fall
outside
the scope of his employment with the Company or his membership on the Board.
The
Company shall advance to Executive all costs and expenses incurred by him
in
connection with a Proceeding within 20 calendar days after receipt by the
Company of a written request for such advance. Such request shall include
an
undertaking by Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled by law to be indemnified
against such costs and expenses; provided that the amount of such obligation
to
repay shall be limited to the after-tax amount of any such advance except
to the
extent Executive is able to offset such taxes incurred on the advance by
the tax
benefit, if any, attributable to a deduction realized by him for the
repayment.
(b) Neither
the failure of the Company (including its Board, legal counsel or shareholders)
to have made a determination prior to the commencement of any Proceeding
concerning payment of amounts claimed by Executive under Paragraph 8(a)
above
that indemnification of Executive is proper because he has met the applicable
standard of conduct, nor a determination by the Company (including its
Board,
legal counsel or shareholders) that Executive has not met such applicable
standard of conduct, shall create a presumption in any judicial proceeding
that
Executive has not met the applicable standard of conduct.
(c) The
Company agrees to continue and maintain a directors’ and officers’ liability
insurance policy covering Executive, for a period of five years from the
Separation Date, with terms and conditions no less favorable than the most
favorable coverage then applying to any other senior level executive officer
or
director of the Company.
9. Cooperation.
Executive shall fully cooperate with the Company in defense of legal claims
asserted against the Company and other matters requiring the testimony
or input
and knowledge of Executive, and the Company agrees to reimburse Executive
for
reasonable costs and expenses incurred as a result thereof. Executive agrees
that he will not speak or communicate with any party or representative
of any
party, who is known to Executive to be either adverse to the Company in
litigation or administrative proceedings or to have threatened to commence
litigation or administrative proceedings against the Company, with respect
to
the pending or threatened legal action, unless he is given express permission
to
do so by the Company, or is otherwise compelled by law to do so, and then
only
after advance notice to the Company.
10. Release
of All Claims.
(a) Release
of Company by Executive.
In
consideration of the receipt of the sums and covenants stated herein, Executive
does hereby, on behalf of himself, his heirs, administrators, executors,
agents,
and assigns, forever release, requite, and discharge the Company and its
agents,
parents, subsidiaries, affiliates, divisions, officers, managers, directors,
employees, predecessors, successors, and assigns (“Released Parties”), both in
their individual and representative capacities, from any and all charges,
claims, demands, judgments, actions, causes of action, damages, expenses,
costs,
attorneys’ fees, and liabilities of any kind whatsoever, whether known or
unknown, vested or contingent, in law, equity or otherwise, which Executive
has
ever had, now has, or may hereafter have against said Released Parties
for or on
account of any matter, cause or thing whatsoever which has occurred prior
to the
date of his signing this Agreement. This release of claims includes, without
limitation of the generality of the foregoing, any and all claims which
are
related to Executive’s employment with the Company or any of its subsidiaries,
affiliates or predecessors, his resignation from his officer position with
the
Company, his resignation from the Board, his resignation from positions
as a
director, officer and/or manager of any of the Company’s subsidiaries or
affiliates, and his resignation as a trustee of the M/I Foundation; and
any and
all rights which Executive has or may have had under the following laws:
Title
VII of the Civil Rights Act of 1964, as amended by the Equal Employment
Opportunity Act of 1972, the Civil Rights Act of 1991; Employee Retirement
Income Xxxxxxxx Xxx, 00 X.X.X. §0000 et seq.;
the
Americans With Disabilities Act; the Age Discrimination in Employment Act,
as
amended; Ohio Revised Code Section 4112.01 et seq.;
and
all other federal, state, and local statutes, regulations or public policies,
as
well as the laws of contract, torts, and all other subjects; provided,
however,
that nothing herein shall be deemed to affect any rights of Executive under
this
Agreement or to any pension, employee welfare benefits, stock options,
or
restricted shares which were vested on or prior to the Separation Date
or
Effective Date, as applicable, and pursuant to this Agreement; and provided
further that nothing herein shall be deemed to affect any rights of Executive
to
indemnification as provided under Paragraph 8 above and for such acts otherwise
covered under the terms and conditions of Directors and Officers liability
insurance maintained by Company during the employment of Executive.
(b) Age
Discrimination Claims and Older Worker’s Benefit Protection Act
Terms.
Executive specifically acknowledges that the release of his claims under
this
Agreement includes, without limitation, waiver and release of all claims
against
the Company and Released Parties under the federal Age Discrimination in
Employment Act (“ADEA”), and Executive further acknowledges and agrees
that:
i.
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Executive
waives his claims under ADEA knowingly and voluntarily in exchange
for the
commitments made herein by the Company, and that certain of the
benefits
provided thereby constitute consideration of value to which Executive
would not otherwise have been entitled;
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ii.
|
Executive
was and is hereby advised to consult an attorney in connection
with this
Agreement;
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iii.
|
Executive
has been given a period of 21 days within which to consider the
terms of
this Agreement;
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iv.
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Executive
may revoke his signature on this Agreement for a period of 7
days
following his execution of this Agreement, rendering the Agreement
null
and void, provided that such revocation is in writing delivered
to J.
Xxxxxx Xxxxx, Senior Vice President and General Counsel, M/I
Homes of
Central Ohio LLC, 0 Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxx
00000;
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v.
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this
Agreement is written in plain and understandable language which
Executive
fully understands; and
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vi.
|
this
Agreement complies in all respects with Section 7(f) of ADEA
and the
waiver provisions of the federal Older Worker Benefit Protection
Act.
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11. Complete
and Absolute Defense.
This
Agreement constitutes, among other things, a full and complete release
of any
and all claims released by either party, and it is the intention of the
parties
hereto that this Agreement is and shall be a complete and absolute defense
to
anything released hereunder. The parties expressly and knowingly waive
their
respective rights to assert any claims against the other which are released
hereunder, and covenant not to xxx the other party or Released Parties
based
upon any claims released hereunder. The parties further represent and warrant
that no charges, claims or suits of any kind have been filed by either
against
the other as of the date of this Agreement.
12. Non-Admission.
It is
understood that this Agreement is, among other things, an accommodation
of the
desires of each party, and the above-mentioned payments and covenants are
not,
and should not be construed as, an admission or acknowledgment by either
party
of any liability whatsoever to the other party or any other person or
entity.
13. Return
of Property.
Except
as provided below, the Company acknowledges that Executive has returned
to the
Company all Company documents and property in his possession or control
including, but not limited to, Personal Computer(s) and all Software, Security
Keys and Badges, Price Lists, Supplier and Customer Lists, Files, Reports,
all
correspondence both internal and external (memoranda, letters, quotes,
etc.),
Business Plans, Budgets, Designs, and any and all other property of the
Company;
and the Company shall promptly return to Executive his personal property
and
files; provided that Executive is expressly permitted to retain, and assume
ownership of, (a) his Company-provided cell phone (together with rights
to the
use of the cell phone number at Executive’s sole expense) and BlackBerry device
and (b) the furniture in Executive’s office; and provided further that Executive
is expressly permitted to retain any documents and property necessary for
Executive’s service as a director of the Company.
14. Knowing
and Voluntary Execution.
Each of
the parties hereto further states and represents that he or it has carefully
read the foregoing Agreement, consisting of 10 pages, and knows the contents
thereof, and that he or it has executed the same as his or its own free
act and
deed. Executive further acknowledges that he has been and is hereby advised
to
consult with an attorney concerning this Agreement and that he had adequate
opportunity to seek the advice of legal counsel in connection with this
Agreement. Executive also acknowledges that he has had the opportunity
to ask
questions about each and every provision of this Agreement and that he
fully
understands the effect of the provisions contained herein upon his legal
rights.
15. Executed
Counterparts.
This
Agreement may be executed in one or more counterparts, and any executed
copy of
this Agreement,
including by facsimile,
shall be
valid and have the same force and effect as the originally-executed
Agreement.
16. Governing
Law.
This
Agreement shall be governed by, and construed and enforced in accordance
with,
the laws of the State of Ohio.
17. Modification.
No
provision of this Agreement may be modified, waived or discharged unless
such
waiver, modification or discharge is agreed to in writing and signed by
Executive and the Company.
18. Assignability.
Executive’s obligations and agreements under this Agreement shall be binding on
Executive’s heirs, executors, legal representatives and assigns and shall inure
to the benefit of any successors and assigns of the Company. The Company
may
assign this Agreement or any of its rights or obligations arising hereunder
to
any party, as part of a sale of substantially all of its
assets or other
significant change of control.
19. Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties hereto in
respect
of the subject matter hereof, and this Agreement supersedes all prior and
contemporaneous agreements between the parties hereto in connection with
the
subject matter hereof.
20. Effective
Date.
This
Agreement will become effective on the eighth day following signature by
Executive and the Company (the “Effective Date”), unless sooner revoked by
Executive by written revocation delivered to the Company’s Senior Vice President
and General Counsel.
[signature
page to follow]
IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed
and witnessed.
XXXXXX
XXXXXXXXXXXXX:
/s/
Xxxxxx Xxxxxxxxxxxxx
Xxxxxx
Xxxxxxxxxxxxx
M/I
HOMES, INC.
By:
/s/
J.
Xxxxxx Xxxxx
J.
Xxxxxx
Xxxxx, Senior Vice
President and General Counsel