Exhibit 10.20
2005 AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This 2005 AMENDED AND RESTATED EMPLOYMENT AGREEMENT (including any
schedule or annex hereto, this "Agreement") is made as of April 15, 2005, by and
between Avatar Properties Inc., a Florida corporation (the "Company"), and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (the "Employee"), and amends and restates in its entirety, the
amended and restated employment agreement dated as of March 6, 2003 between the
Company and the Employee (the "Original Agreement").
W I T N E S S E T H
WHEREAS, the Employee is currently employed as Chief Operating
Officer and Executive Vice President of the Company pursuant to the Original
Agreement; and
WHEREAS, the Company and the Employee wish to provide for certain
modifications to the Original Agreement and wish to amend, restate and supersede
the Original Agreement, all upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. Employment and Term. The Company hereby employs the Employee, and
the Employee hereby accepts employment by the Company, in the capacity and upon
the terms and conditions set forth herein. The term of employment under this
Agreement shall be for the period commencing as of January 1, 2005 and ending on
December 31, 2010, unless extended pursuant to Section 5(a)(viii) or earlier
terminated as herein provided (the "Term of Employment"; provided, that, for
purposes of Sections 4, 6(h) and 8(a) hereof, the Term of Employment shall also
include the period beginning on January 1, 2003 and ending on December 31,
2004). The last day of the Employee's Term of Employment shall be referred to in
this Agreement as the "Date of Termination." With respect to any date referred
to herein, the term "Anniversary" shall mean the annual recurrence of such date.
2. Duties. During the Term of Employment, the Employee shall serve as
the Company's Chief Operating Officer and Executive Vice President, and shall
perform such duties, functions and responsibilities as are customarily
associated with and incident to the position of Chief Operating Officer and
Executive Vice President and as the Company may, from time to time, require of
him, including, but not limited to, the performance of such functions and duties
for the Company, Avatar Holdings Inc., a Delaware corporation and the parent
corporation of the Company ("Avatar"), or any of their subsidiaries or
affiliates (the foregoing entities being referred to herein collectively as the
"Avatar Entities" and each as an "Avatar Entity") as the Company may require,
subject to the direction of the Company's Board of Directors. The Employee shall
serve the Company faithfully, conscientiously and to the best of the Employee's
ability and shall promote the interests and reputation of the Company. Unless
prevented by sickness or disability, the Employee shall devote all of his time,
attention, knowledge, energy and skills, during normal working hours, and at
such other times as the Employee's duties may reasonably require, to the duties
of the Employee's employment. The principal place of employment of the Employee
shall be the current principal executive offices of the Company and/or such
other location within fifty (50) miles of Company's current principal place of
business as shall be necessary for the Employee to discharge his duties
hereunder. The Employee acknowledges that in the course of his employment he may
be required, from time to time, to travel on behalf of the Company; provided,
however, that the Employee shall not be required to spend more than 25% of his
business time (determined on an annual basis) on overnight travel.
3. Compensation and Benefits. As full and complete compensation for
the Employee's execution and delivery of this Agreement and performance of any
services hereunder, the Company shall pay, grant or provide the Employee, and
the Employee agrees to accept, the following compensation and benefits:
(a) Base Salary. Except as provided in Section 6(f)(ii) hereof, the
Company shall pay the Employee a base salary ("Base Salary") at an annual rate
of $500,000 payable at such times and in accordance with the standard payroll
practices of the Company. On an annual basis or at such other times as the
Company may determine, the Employee's Base Salary shall be reviewed, and in the
sole discretion of the Board of Directors of the Company, the Company may
increase (but not decrease) the Employee's Base Salary.
(b) Annual Bonus. Except as provided in Section 6(f)(ii) hereof, (i)
during the Term of Employment, the Company shall pay the Employee, and the
Employee shall accept from the Company for the Employee's services, in addition
to the Employee's Base Salary, a calendar year annual cash bonus of $400,000
("Annual Bonus"), and (ii) such Annual Bonus shall be payable in accordance with
the Company's policy with respect to the compensation of executives, but no
later than thirty (30) days after the end of each calendar year in respect of
which the Annual Bonus is earned.
(c) Employee Benefits. The Company shall afford the Employee the
opportunity to participate during the Term of Employment in any medical, dental,
disability insurance, retirement, savings and any other employee benefits plans
or programs (including perquisites) which Avatar maintains for senior executives
of the Avatar Entities. Nothing in this Agreement shall require any Avatar
Entity to establish, maintain or continue any benefit programs already in
existence or hereafter adopted for senior executives of the Avatar Entities, and
nothing in this Agreement shall restrict the right of the Avatar Entities to
amend, modify or terminate any such benefit program.
(d) Expenses. The Employee shall be entitled to reimbursement or
payment of reasonable business expenses (in accordance with Avatar's policies
for its senior executives, as the same may be amended from time to time in
Avatar's sole discretion), following the Employee's submission of appropriate
receipts and/or vouchers to the Company.
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(e) Vacations, Holidays or Temporary Leave. The Employee shall be
entitled to take such amount of vacation per year as is permitted pursuant to
and in accordance with the policies of Avatar for its senior executives (as such
policies may be amended from time to time or terminated in Avatar's sole
discretion), without loss or diminution of compensation. Such vacation shall be
taken at such time or times, and as a whole or in increments, as the Employee
shall elect, consistent with the reasonable needs of the Company's business. The
Employee shall further be entitled to the number of paid holidays, and leaves
for illness or temporary disability in accordance with the policies of Avatar
for its senior executives (as such policies may be amended from time to time or
terminated in Avatar's sole discretion).
4. Non-Competition and Protection of Confidential Information:
(a) Restrictive Covenants.
(i) During the Term of Employment and for one year
following the Date of Termination, the Employee shall not directly or
indirectly engage, participate, own or make any financial investments
in, or become employed by or render (whether or not for compensation)
any consulting, advisory or other services to or for the benefit of,
any person, firm or corporation, that directly or indirectly, engages
primarily in, the development of adult retirement communities and/or
active adult communities; provided, however, that it shall not be a
violation of this Agreement for the Employee (i) to have beneficial
ownership of less than 1% of the outstanding amount of any class of
securities of any enterprise (but without otherwise participating in
the activities of such enterprise) if such securities are registered
under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or quoted on an inter-dealer quotation system or
(ii) to have beneficial ownership of less than 20% of the outstanding
amount of any class of securities of any enterprise (but without
otherwise participating in the activities or otherwise having
influence or control of such enterprise) if such securities are not
registered under Section 12 of the Exchange Act or quoted on an
inter-dealer quotation system.
(ii) During the Term of Employment and for one year
following the Date of Termination, the Employee shall not, directly
or indirectly, (A) solicit, in competition with the Avatar Entities,
any person who is a customer of any business conducted by any of the
Avatar Entities or (B) in any manner whatsoever induce, or assist
others to induce, any supplier or contractor of any of the Avatar
Entities to terminate its association with any such entity or do
anything, directly or indirectly, to interfere with the business
relationship between the Avatar Entities and any of their respective
current or prospective suppliers or contractors.
(iii) During the Term of Employment and for one year
following the Date of Termination, the Employee shall not, directly
or indirectly, solicit or induce any employee of any of the Avatar
Entities to terminate his or her employment for any purpose,
including without limitation, in order to enter into employment with
any entity which competes with any business conducted by any of the
Avatar Entities.
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(iv) The Employee recognizes and acknowledges that certain
confidential and proprietary business and technical information used
by the Employee in connection with the conduct of the business of the
Avatar Entities which relates to the business practices, methods,
processes or other confidential or secret aspects of the business of
the Avatar Entities, is a valuable, special and unique asset of the
Company, such information collectively being referred to as the
"Confidential Information." During the Term of Employment and for all
time following the Date of Termination, the Employee shall not,
directly or indirectly, furnish or make accessible to any person,
firm, or corporation or other business entity, whether or not he,
she, or it competes with the business of the Company, any
Confidential Information without the prior written consent from the
Company.
(v) Confidential Information shall not include any
information or documents that (A) are or become publicly available
without breach by the Employee of Section 4(a)(iv) hereof, (B) the
Employee receives from any third party who, to the best of the
Employee's knowledge upon reasonable inquiry, is not in breach of an
obligation of confidence with any of the Avatar Entities, or (C) is
required to be disclosed by law, statute, governmental or judicial
proceeding; provided, however, that in the event the Employee is
requested by any governmental or judicial authority to disclose any
Confidential Information, the Employee shall give the Company and
Avatar prompt notice of such request such that the Company and Avatar
may seek a protective order or other appropriate relief, and in any
such proceeding the Employee shall disclose only so much of the
Confidential Information as is required to be disclosed.
(vi) Notwithstanding the foregoing, the Employee acknowledges that during the
Term of Employment and for all time following the Date of Termination, the
Employee shall not, and shall not cause or permit any of its affiliates to, use
the name "▇▇▇▇▇▇▇▇-▇▇▇▇" (or any derivative thereof) except as expressly
permitted by those certain License Agreements, each dated as of December 4,
1997, by and between ▇▇▇▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ Ian, Inc., as licensor and the companies
listed on Schedule I hereto, each as a licensee, or except as otherwise
permitted in writing by Avatar.
(b) Geographic Scope. The provisions of this Section 4 (other than
Sections 4(a)(ii), (iii), (iv), (v), and (vi), which shall be in full force and
effect without regard to the geographic limitations set forth in this Section
4(b)) shall be in full force and effect within a 100-mile radius of any site at
which any of the Avatar Entities is preparing to develop, has commenced
development of, or has a binding commitment or option to purchase, real estate.
(c) Remedies. The Employee acknowledges that his services are of a
special, unique and extraordinary character and, his position with the Avatar
Entities places him in a substantial relationship and a position of confidence
and trust with specific prospective or existing customers, suppliers and
employees of the Avatar Entities, and that in connection with his services to
the Avatar Entities, the Employee will have access to confidential business or
professional information vital to the businesses of the Avatar Entities. The
Employee further acknowledges that in view of the nature of the business in
which the Avatar Entities are engaged, the foregoing restrictive covenants in
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this Section 4 are reasonable and necessary in order to protect the legitimate
business interests of the Avatar Entities and that violation thereof would
result in irreparable injury to the Avatar Entities. Accordingly, the Employee
consents and agrees that if the Employee violates or threatens to violate any of
the provisions of this Section 4 the Avatar Entities would sustain irreparable
harm and, therefore, any of the Avatar Entities shall be entitled to obtain from
any court of competent jurisdiction, temporary, preliminary and/or permanent
injunctive relief as well as damages, attorneys' fees and costs, and an
equitable accounting of all earnings, profits and other benefits arising from
such violation, which rights shall be cumulative and in addition to any other
rights or remedies in law or equity to which any of the Avatar Entities may be
entitled.
5. Termination of Employment:
(a) The Employee's employment with the Company shall terminate upon
the occurrence of any of the following events:
(i) on December 31, 2010 (absent a Change in Control (as
defined below) and absent the parties having entered into a written
agreement for the renewal or extension of this Agreement);
(ii) the death of the Employee during the Term of
Employment;
(iii) at any time upon written notice to the Employee from
the Company of termination of his employment due to Disability (as
defined below) of the Employee during the Term of Employment;
(iv) at any time upon written notice to the Employee from
the Company of termination of his employment for Cause (as defined
below);
(v) at any time upon written notice to the Employee from
the Company of termination of his employment Without Cause (as
defined below);
(vi) the resignation by the Employee for Good Reason (as
defined below) during the Term of Employment;
(vii) the resignation by the Employee Without Good Reason
(as defined below) during the Term of Employment; or
(viii) in the event of a Change in Control (as defined
below), on the date (the "Retention Date") that is the earlier of (A)
the first Anniversary of the Change in Control Date (as defined
below) and (B) June 30, 2011; provided, that the Change in Control
Date shall be on or prior to December 31, 2010. If the Retention Date
shall occur after December 31, 2010, the Term of Employment shall be
extended through and until such Retention Date, unless otherwise
terminated in accordance with this Agreement. The period beginning on
the Change in Control Date and ending on the Retention Date is
referred to herein as the "Retention Period".
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(b) For purposes of this Agreement, the "Disability" of the Employee
shall mean the Employee's inability, because of mental or physical illness or
incapacity, whether total or partial, to perform one or more material functions
of the Employee's employment under this Agreement with or without reasonable
accommodation and which entitles the Employee to receive benefits under a
disability plan or program that is provided to the Employee pursuant to Section
3(c), if any.
(c) For purposes of this Agreement, the term "Cause" shall mean the
Employee's (i) conviction or entry of a plea of guilty or nolo contendere, with
respect to any felony, in each case that the Board of Directors of Avatar
determines in good faith is or may become materially harmful to any Avatar
Entity (either financially or with respect to such Avatar Entity's business
reputation), (ii) commission of any act of willful misconduct, gross negligence,
fraud or dishonesty, in each case that the Board of Directors of Avatar
determines in good faith is or may become materially harmful to any Avatar
Entity (either financially or with respect to such Avatar Entity's business
reputation) or (iii) violation of any material term of this Agreement or any
material written policy of the Company or Avatar; provided, that the Company
first deliver written notice of such violation to the Employee and the Employee
shall not have cured such violation within thirty (30) days after receipt of
such written notice (the "Cure Period"); and provided further, that if upon
expiration of the Cure Period such violation has not been cured and the Company
determines, in its sole discretion, that the Employee is using his best efforts
to cure such violation and such violation is capable of being cured, the Company
shall provide the Employee, pursuant to a written notice, a reasonable amount of
additional time (the "Extended Cure Period") to cure such violation but in no
event shall such Extended Cure Period exceed forty-five (45) days from the date
on which the initial Cure Period expired.
(d) For purposes of this Agreement, "Without Cause" shall mean any
reason other than the reasons described in Sections 5(a)(i), 5(a)(ii),
5(a)(iii), 5(a)(iv) and 5(a)(viii) hereof. The parties expressly agree that a
termination of employment Without Cause pursuant to Section 5(a)(v) hereof may
be for any reason whatsoever, or for no reason, in the sole discretion of the
Company.
(e) For purposes of this Agreement, "Good Reason" shall mean (i) any
assignment of material duties to the Employee other than those contemplated by
this Agreement, provided that the Company shall have thirty (30) days after
receipt of written notice by the Employee to cure or (ii) a reduction in the
rate of compensation, or a material reduction in fringe benefits (other than a
material reduction in fringe benefits generally applicable to senior executives
of Avatar) or any other material failure by the Company to perform its material
obligations, provided that the Company shall have thirty (30) days after receipt
of written notice by the Employee to cure. Employee acknowledges and agrees that
a Change in Control (as defined below) may require adjustment to Employee's
existing duties; however, such adjustment shall not constitute "Good Reason"
provided that such adjusted duties are comparable to Employee's duties prior to
such Change in Control.
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(f) For purposes of this Agreement, "Without Good Reason" shall mean
any reason other than that defined in this Agreement as constituting Good
Reason.
(g) For purposes of this Agreement, "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 Avatar representing ninety percent (90%) or more of
the combined voting power of the issued and outstanding common stock of Avatar;
(b) the Board of Directors of Avatar approves any merger, consolidation or like
business combination or reorganization of Avatar, 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) Avatar 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."
(h) For purposes of this Agreement, "Administrator" and "Retention
Account" shall have the respective meanings ascribed to such terms in the
Retention Account Procedures.
(i) For purposes of this Agreement, "Retention Account Procedures"
shall mean the procedures set forth in the Annex hereto.
6. Payments Upon Termination of Employment.
(a) Termination upon Expiration of Term of Employment. If the
Employee's employment hereunder is terminated pursuant to Section 5(a)(i), the
Company shall pay or provide to the Employee (i) all Base Salary and Annual
Bonus payments pursuant to Sections 3(a) and 3(b) hereof, respectively, and any
vacation pay pursuant to Section 3(e) hereof, in each case which has been earned
but has not been paid as of the Date of Termination and (ii) any benefits to
which the Employee may be entitled under any employee benefits plan or program
pursuant to Section 3(c) hereof in which he is a participant in accordance with
the terms of such plan or program up to and including the Date of Termination.
(b) Death or Disability.
(i) Subject to Section 6(b)(ii) below, if the Employee's
employment hereunder is terminated due to the Employee's death or
Disability pursuant to Sections 5(a)(ii) or (iii) hereof and a Change
in Control Date shall not have occurred prior to such termination,
the Company shall pay or provide to the Employee, his designated
beneficiary or to his estate (i) all Base Salary pursuant to Section
3(a) hereof and any vacation pay pursuant to Section 3(e) hereof, in
each case which has been earned but has not been paid as of the Date
of Termination (ii) a prorated Annual Bonus as of Employee's
termination due to death or Disability and (iii) any benefits to
which the Employee may be entitled under any employee benefits plan
or program pursuant to Section 3(c) hereof in which he is a
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participant in accordance with the terms of such plan or program up
to and including the Date of Termination. Should the Company wish to
purchase insurance to cover the costs associated with the Employee's
termination of employment pursuant to Sections 5(a)(ii) or (iii), the
Employee agrees to execute any and all necessary documents necessary
to effectuate such insurance.
(ii) If the Employee's employment hereunder is terminated
due to the Employee's death or Disability pursuant to Sections
5(a)(ii) or (iii) hereof and a Change in Control Date shall have
occurred prior to such termination, (A) the Administrator shall
disburse to the Employee, his designated beneficiary or to his estate
a pro rata portion of the Retention Amount as of the Date of
Termination equal to the Retention Amount multiplied by a fraction
(x) the numerator of which is the number of days elapsed in the
Retention Period as of the Date of Termination and (y) the
denominator of which is the total number of days in the Retention
Period and (B) the remaining balance of the Retention Amount shall be
disbursed by the Administrator as a donation to one or more
charitable, not-for-profit organizations designated by the Board of
Directors of Avatar, in its sole discretion, in each case subject to
and in accordance with the Retention Account Procedures.
(c) Termination for Cause or Resignation Without Good Reason. If the
Employee's employment hereunder is terminated pursuant to Section 5(a)(iv) or
Section 5(a)(vii), the Company shall pay or provide to the Employee (i) all Base
Salary pursuant to Section 3(a) hereof and any vacation pay pursuant to Section
3(e) hereof, in each case which has been earned but has not been paid as of the
Date of Termination and (ii) any benefits to which the Employee may be entitled
under any employee benefits plan or program pursuant to Section 3(c) hereof in
which he is a participant in accordance with the terms of such plan or program
up to and including the Date of Termination, in each case subject to set-off,
counterclaim, recoupment, defense or any other claim, right or cause of action
which the Company may have against the Employee or others. Notwithstanding the
foregoing, if a Change in Control Date has occurred and the Employee's
employment hereunder is terminated pursuant to Section 5(a)(iv) or Section
5(a)(vii) during the Retention Period, Employee shall not be entitled to receive
any portion of the Retention Amount and the entire balance of the Retention
Amount shall be disbursed by the Administrator as a donation to one or more
charitable, not-for-profit organizations designated by the Board of Directors of
Avatar, in its sole discretion, subject to and in accordance with the Retention
Account Procedures.
(d) Termination Without Cause or Resignation For Good Reason. If the
Employee's employment hereunder is terminated by the Company Without Cause
pursuant to Section 5(a)(v), or due to the Employee's resignation for Good
Reason pursuant to Section 5(a)(vi), then:
(i) The Company shall continue to pay the Employee his
full Base Salary and Annual Bonus in accordance with normal payroll
practices and without interest through the earlier of (A) December
31, 2010 and (B) the second Anniversary of the Date of Termination,
at the rate in effect at the time notice of the termination of the
Employee's employment is given in accordance with Section 5(a)(v) or
Section 5(a)(vi) hereof, as the case may be; provided, however, that
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if a Change of Control Date shall have occurred prior to Employee's
termination Without Cause or resignation for Good Reason, the
Administrator shall disburse the Retention Amount (as defined in
Section 6(f) hereof) to the Employee on or promptly following the
Date of Termination, subject to and in accordance with the Retention
Account Procedures; and
(ii) The Employee shall be entitled to participate in all
employee benefit plans and programs to the extent applicable to other
senior executives of Avatar and the Company (provided that the
Employee's continued participation is permissible under the general
terms and provisions of such plans and programs) through the earlier
of (A) December 31, 2010 and (B) the second Anniversary of the Date
of Termination; provided, however, that if a Change of Control shall
have been consummated prior to Employee's termination Without Cause
or resignation for Good Reason, the Employee shall be entitled to
participate in such benefit plans and programs through the Retention
Date. In the event that the Employee's participation in any such plan
or program is not permitted, the Employee shall be entitled to
receive an amount equal to the annual contributions, payments,
credits or allocations made by the Company to the Employee's account
or on the Employee's behalf under such plans and programs.
(e) Duty to Seek Other Employment. If the Employee's employment
hereunder is terminated by the Company Without Cause pursuant to Section
5(a)(v), or due to the Employee's resignation for Good Reason pursuant to
Section 5(a)(vi), the Employee agrees, during the entire period of time that the
Employee is entitled to receive any benefits pursuant to Section 6(d) above, to
make known the Employee's availability for employment involving services of a
nature substantially similar and of a comparable stature to those performed by
the Employee on behalf of the Company in a manner customary for executives
holding positions substantially similar and of a comparable stature to the
Employee's position with the Company; provided, however, that, subject to
Section 4 hereof, the Employee shall only be obligated to accept such employment
if the principal office where the Employee will be employed is located within a
fifty (50) mile radius of Coral Gables, Florida. The Employee agrees to keep the
Chairman of the Board of Avatar (or his designee) apprised of the Employee's
employment status during such period and, if requested, the Employee will
provide appropriate supporting documentation with respect to the salary, bonuses
or other compensation earned by and benefits made available to the Employee in
respect of such employment. In the event the Employee secures employment as
described in this Section 6(e), the Company shall be entitled to (i) deduct from
the amounts payable to the Employee pursuant to Sections 6(c)(i) and 6(c)(ii)
above (excluding any accrued but unpaid Annual Bonus through the date of
termination) any salary, bonuses or other compensation paid to the Employee in
connection with such employment and (ii) terminate the Employee's participation
in (and shall not be required to pay the Employee any sums in respect of) any
employee benefit plans and programs described in Section 6(d)(ii) that are
substantially similar to any employee benefit plans and programs in which the
Employee participates in connection with such new or existing employment. The
Employee agrees promptly to repay to the Company any amounts paid to the
Employee by the Company pursuant to Sections 6(d)(i) and 6(d)(ii) which the
Company was entitled to deduct from such amounts pursuant to this Section 6(e).
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(f) Change in Control; Termination Upon the Retention Date. In the
event of a Change in Control during the Term of Employment:
(i) The Company shall pay or provide to the Employee (i)
all Base Salary payments and a prorated Annual Bonus pursuant to
Sections 3(a) and 3(b) hereof, respectively, and any vacation pay
pursuant to Section 3(e) hereof, in each case which has been earned
but has not been paid as of the Date of Termination and (ii) any
benefits to which the Employee may be entitled under any employee
benefits plan or program pursuant to Section 3(c) hereof in which he
is a participant in accordance with the terms of such plan or program
up to and including the Change in Control Date.
(ii) Base Salary and Annual Bonus payments otherwise
payable to the Employee during the Retention Period pursuant to
Sections 3(a) and 3(b) hereunder, respectively, shall be subject to
the Retention Account Procedures and the conditions set forth in this
Section 6(f)(ii). On the Change in Control Date, the Employee shall
cease to receive Base Salary and Annual Bonus payments, and the
Company shall deposit into the Retention Account an amount (the
"Retention Amount") equal to (A) $1,800,000, if the Change in Control
Date shall occur before June 30, 2010 or (B) if the Change in Control
Date shall occur on or after June 30, 2010, the product of $1,800,000
multiplied by a fraction (x) the numerator of which is the number of
days after the Change in Control Date through and including the
Retention Date and (y) the denominator of which is 365. If the
Employee's employment has not been otherwise terminated in accordance
with this Agreement (except pursuant to Sections 5(a)(v) or 5(a)(vi))
and the Employee is continuously employed by the Company through the
Retention Period such that the Employee's employment terminates upon
the Retention Date pursuant to Section 5(a)(viii) hereof, the
Administrator shall distribute the Retention Amount to the Employee
on or promptly following the Retention Date, subject to and in
accordance with the Retention Account Procedures.
(g) No Other Payments. Except as provided in this Section 6 and
except as may otherwise be provided pursuant to any written incentive award
agreement between the Employee and any Avatar Entity, the Employee shall not be
entitled to receive any other payments or benefits from the Company due to the
termination of his employment, including but not limited to, any employee
benefits under any of the Company's or Avatar's employee benefits plans or
programs (other than at the Employee's expense under the Consolidated Omnibus
Budget Reconciliation Act of 1985 or pursuant to the terms of any pension plan
which the Company or Avatar may have in effect from time to time) or any right
to be paid severance pay. If the Employee is entitled to any notice or payment
in lieu of any notice of termination required by Federal, State or local law,
including but not limited to the Worker Adjustment and Retraining Notification
Act, the Company's obligation to make payments pursuant to Section 6(d) shall be
reduced by the amount of any such payment in lieu of notice.
(h) Conditions to Payments upon Termination of Employment.
Notwithstanding anything to the contrary contained in this Agreement, all
payments and benefits to the Employee provided pursuant to this Section 6 shall
be subject to the Employee's compliance with Section 4.
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7. Employment after the Employment Term. No later than January 2,
2009, the Company shall enter into negotiations, in good faith, with the
Employee regarding the continued employment of the Employee with the Company
after the Term of Employment.
8. No Conflicting Agreements; Indemnification.
(a) The Employee hereby represents and warrants that he is not a
party to any agreement, or non-competition or other covenant or restriction
contained in any agreement, commitment, arrangement or understanding (whether
oral or written), which would in any way conflict with or limit his ability to
commence work on the first day of the Term of Employment or would otherwise
limit his ability to perform all responsibilities in accordance with the terms
and subject to the conditions of this Agreement.
(b) The Employee agrees that the compensation provided in Section 3
represents the sole compensation to be paid to the Employee in respect of the
services performed or to be performed for the Avatar Entities by the Employee
(other than any incentive compensation paid or to be paid to the Employee
pursuant to any written incentive award agreement between the Employee and any
Avatar Entity). The Employee further agrees that should there be a determination
that for federal, state, local and/or other tax purposes, the Employee's
compensation for services performed for any of the Avatar Entities is greater
than the amounts payable hereunder, the Employee will indemnify and hold
harmless the Avatar Entities against any and all liabilities, losses, and
expenses including, but not limited to, any additional taxes, penalties and
interest, and attorneys' and accountants' fees arising out of, resulting from or
relating to such determination.
9. Deductions and Withholding. The Employee agrees that the Company
shall withhold from any and all compensation required to be paid to the Employee
pursuant to this Agreement all federal, state, local and/or other taxes which
the Company determines are required to be withheld in accordance with applicable
statutes and/or regulations from time to time in effect and all amounts required
to be deducted in respect of the Employee's coverage under applicable employee
benefit plans.
10. Entire Agreement. This Agreement, the letter agreement, dated as
of the date hereof, among the Company, Avatar and the Employee, and for purposes
of the definition of "Retention Amount," the 2008-2010 Earnings Participation
Award Agreement, dated as of the date hereof, between Avatar and the Employee,
embody the entire agreement of the parties with respect to the Employee's
employment and supersedes any other prior oral or written agreements between the
Employee and any Avatar Entity. This Agreement may not be modified or terminated
orally but only by an agreement in writing signed by the parties hereto.
11. Waiver. The waiver by the Company of a breach of any provision of
this Agreement by the Employee shall not operate or be construed as a waiver of
any subsequent breach by the Employee. The waiver by the Employee of a breach of
11
any provision of this Agreement by the Company shall not operate or be construed
as a waiver of any subsequent breach by the Company.
12. Governing Law. This Agreement shall be subject to, and governed
by, the laws of the State of Florida applicable to contracts made and to be
performed in the State of Florida, regardless of where the Employee is in fact
required to work.
13. Jurisdiction. Any legal suit, action or proceeding against any
party hereto arising out of or relating to this Agreement (including the
Retention Account Procedures) shall be instituted in a federal or state court in
Dade County or Broward County in the State of Florida and each party hereto
waives any objection which it may now or hereafter have to the laying of venue
of any such suit, action or proceeding and each party hereto irrevocably submits
to the jurisdiction of any such court in any suit, action or proceeding.
14. Assignability. The obligations of the Employee may not be
delegated and, except as expressly provided in Section 6(b) relating to the
designation of beneficiaries, the Employee may not, without the Company's
written consent thereto, assign, transfer, convey, pledge, encumber, hypothecate
or otherwise dispose of this Agreement or any interest therein. Any such
attempted delegation or disposition shall be null and void and without effect.
The Company and the Employee agree that this Agreement and all of 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 Avatar Entity or successor thereof. The term "successor" shall mean,
with respect to any Avatar Entity, and any other corporation or other business
entity which, by merger, consolidation, purchase of the assets, or otherwise,
acquires all or a material part of the assets of such Avatar Entity. Except as
expressly provided in Section 6(f) hereof, any assignment by the Company of its
rights and obligations hereunder to any affiliate of or successor shall not be
considered a termination of employment for purposes of this Agreement.
15. Severability. If any provision of this Agreement as applied to
either party or to any circumstances shall be adjudged by a court of competent
jurisdiction to be void or unenforceable, the same shall in no way affect any
other provision of this Agreement or the validity or enforceability of this
Agreement. If any court construes any of the provisions of Section 4 hereof, or
any part thereof, to be unreasonable because of the duration of such provision
or the geographic or other scope thereof, such court may reduce the duration or
restrict the geographic or other scope of such provision and enforce such
provision as so reduced or restricted.
12
16. Notices. All notices to the Employee hereunder shall be in
writing and shall be delivered personally or sent by registered or certified
mail, return receipt requested, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
c/o Avatar Properties Inc.
12th Floor
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Kluger, Peretz, ▇▇▇▇▇▇ & Berlin, P.L.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices to the Company hereunder shall be in writing and shall be delivered
personally or sent by registered or certified mail, return receipt requested,
to:
Avatar Properties Inc.
12th Floor
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman of the Board
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Avatar Properties Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Avatar Holdings Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman of the Board
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
13
and with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇ ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change the address to which notices shall be sent by sending
written notice of such change of address to the other party.
17. Separate Independent Agreements. Notwithstanding anything to the
contrary contained in this Agreement, the terms of this Agreement shall not
amend, supersede or alter in any way the terms of any other written agreement
(other than the letter agreement, dated as of the date hereof, among Avatar, the
Company and the Employee) between the Employee, on the one hand, and the Company
or Avatar, on the other hand, except as expressly set forth in such other
agreement.
18. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
20. 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.
21. Neutral Construction. Each party to this Agreement was
represented by counsel, or had the opportunity to consult with counsel. No party
may rely on any drafts of this Agreement in any interpretation of the Agreement.
Each party to this Agreement has reviewed this Agreement and has participated in
its drafting and, accordingly, no party shall attempt to invoke the normal rule
of construction to the effect that ambiguities are to be resolved against the
drafting party in any interpretation of this Agreement.
(signature page follows)
14
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
AVATAR PROPERTIES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
ANNEX
Retention Account Procedures
Capitalized terms used but not otherwise defined in this Annex shall have the
meanings ascribed to such terms in the Amended and Restated Employment Agreement
between Avatar Properties Inc. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, dated as of April 15, 2005
(the "Agreement").
In the event of a Change in Control, the Retention Amount to which the Employee
may be entitled pursuant to (i) the Agreement and (ii) the 2008-2010 Earnings
Participation Award Agreement between the Employee and Avatar, dated as of April
15, 2005 (collectively, the "Applicable Agreements"), are subject to the
Retention Account Procedures as further described in this Annex.
1. Administrator. These Retention Account Procedures shall be administered by
such person or entity as is designated by the Board of Directors of Avatar (the
"Board") on or prior to the Change in Control Date (the "Administrator");
provided, that such Administrator shall be (i) a member of the Board as of the
date of the Agreement who is "independent" as defined in the listing standards
of The NASDAQ Stock Market, Inc. or (ii) a bank, trust company or similar
custodial institution that is free from conflicts of interest with the Avatar
Entities and the Employee.
2. Retention Account.
(a) Upon a Change in Control, the Retention Amount shall be deposited
into a separate account under the exclusive control of the Administrator (the
"Retention Account").
(b) Any cash to be deposited into the Retention Account may be held
in an interest-bearing bank account, invested by the Administrator in short-term
U.S. government securities or other short-term investments to be determined by
the Administrator in its sole discretion. Any income derived from such deposits
or investments shall be deposited in the Retention Account and shall be
distributed in accordance with these Retention Account Procedures.
(c) If (i) the Employee is continuously employed by any of the Avatar
Entities through the Retention Period until the Retention Date, then on or
promptly following the Retention Date, the Administrator shall distribute the
Retention Amount to the Employee, or (ii) the Employee's employment is
terminated for any reason prior to the Retention Date, subject to paragraph (d)
below, Avatar (or its successor) and the Employee shall notify the
Administrator, in a writing signed by the Employee and Chairman of the Board of
Avatar (or its successor) (the "Joint Notice"), of the agreement between Avatar
and the Employee directing the Administrator to disburse the Retention Amount
pursuant to the Applicable Agreements.
(d) The Administrator shall have no right to make an independent
determination as to the circumstances in which the Employee's employment was
terminated or as to its duty to disburse monies or other property from the
Retention Account. If, at any time, there shall exist any dispute between Avatar
(or its successor) and the Employee as to the employment status of the Employee,
the circumstances in which such employment was terminated or the holding or
disposition of monies and/or property from the Retention Account, the
Administrator may (i) refrain from disbursing any monies and/or property from
the Retention Account until (x) the rights of Avatar (and any successor) and the
Employee (or Employee's heirs, executors or administrators) with respect to such
monies and/or property shall have been fully and finally adjudicated by a
non-appealable final order, decree or judgment of a court of competent
jurisdiction or (y) all such disputes shall have been resolved and the
Administrator shall have received a Joint Notice to that effect or (ii) deposit
the monies and/or property held in the Retention Account in the registry of a
court of competent jurisdiction pending full and final adjudication pursuant to
the rules of procedure governing practice in such court.
3. Administration of the Retention Account by the Administrator.
(a) Prior to the Change in Control Date, the Board shall establish a
cash reserve fund in an amount to be available to the Administrator for any and
all of its expenses or costs incurred in connection with these Retention Account
Procedures. All expenses and costs shall be paid out of the reserve fund, and to
the extent that the amount in the reserve fund is insufficient to cover such
expenses and costs, Avatar (or its successor) shall promptly make the requisite
payment to cover such expenses and costs.
(b) The Administrator shall have the right to engage counsel and
otherwise seek advice with respect to these Retention Account Procedures and the
obligations of the Administrator hereunder.
(c) The Administrator shall have no obligation or liability to the
Employee or Avatar (or its successor) except for acts or omissions not in good
faith. Avatar (and its successor) shall indemnify the Administrator and hold the
Administrator harmless against any liability arising out of these Retention
Account Procedures except in the case of acts or omissions not in good faith.
(d) Avatar and the Employee agree to execute such agreements,
documents or certificates as are reasonably necessary or advisable in order to
effect these Retention Account Procedures.
SCHEDULE I
Existing ▇▇▇▇▇▇▇▇-▇▇▇▇ Projects and Licensees
1. ▇▇▇▇▇▇▇▇-▇▇▇▇ at Harbor Islands, Inc.
2. ▇▇▇▇▇▇▇▇-▇▇▇▇ Organization, Inc.
3. ▇▇▇▇▇▇▇▇-▇▇▇▇ and Associates, Inc.
4. ▇▇▇▇▇▇▇▇-▇▇▇▇ at Treasure Trove, Inc.
5. ▇▇▇▇▇▇▇▇-▇▇▇▇ at Country Club Estates, Inc.
6. ▇▇▇▇▇▇▇▇ and Fels at the Sanctuary, Inc.
7. ▇▇▇▇▇▇▇▇-▇▇▇▇ of South Florida, Inc.
8. ▇▇▇▇▇▇▇▇-▇▇▇▇ Custom Builders, Inc.
9. ▇▇▇▇▇▇▇▇-▇▇▇▇ Home and Design, Inc.
10. ▇▇▇▇▇▇▇▇-▇▇▇▇ Management Corporation
11. ▇▇▇▇▇▇▇▇-▇▇▇▇ at Presidential Estates, Inc.
12. ▇▇▇▇▇▇▇▇-▇▇▇▇ Construction Corp.
13. ▇▇▇▇▇▇▇▇-▇▇▇▇ Builders, Inc.
14. Sunset Point at Silver Lakes, Ltd. (d/b/a
▇▇▇▇▇▇▇▇-▇▇▇▇ - ▇▇▇▇▇▇▇▇▇ Group)
15. Parkland Communities, Inc. (d/b/a
▇▇▇▇▇▇▇▇-▇▇▇▇ - ▇▇▇▇▇▇▇▇▇ Group)