Exhibit 1.20
▇▇▇ ▇▇▇▇ CORPORATION
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
EMPLOYMENT AGREEMENT
TABLE OF CONTENTS
Page
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1. DEFINITIONS...............................................................1
2. TERM OF AGREEMENT; DUTIES.................................................1
(a) Initial Term; Renewal; Employment Period Defined.....................1
(b) Duties...............................................................1
(c) Employee Commitments.................................................2
(d) Other Programs.......................................................2
3. COMPENSATION..............................................................2
(a) Base Salary..........................................................2
(b) Incentive and Benefit Plans..........................................2
(c) Supplemental Executive Retirement Plan...............................3
4. CONFIDENTIALITY...........................................................3
5. TERMINATION DUE TO DEATH OR DISABILITY....................................3
(a) Death................................................................3
(b) Permanent Disability.................................................4
(c) Salary Continuation..................................................4
(d) Lapse of Provisions..................................................4
6. TERMINATION BY COMPANY....................................................4
(a) Termination for Cause................................................4
(b) "Cause" Defined......................................................4
(c) Termination Without Cause............................................5
7. TERMINATION BY EMPLOYEE...................................................5
(a) General..............................................................5
(b) Good Reason Defined..................................................5
(c) Company May Cure Good Reason.........................................6
(d) Effect of Good Reason Termination....................................6
(e) Effect of Termination without Good Reason............................6
8. SEVERANCE BENEFITS........................................................7
(a) Eligibility..........................................................7
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(b) Severance Benefits...................................................7
(c) Severance Period.....................................................9
(d) COBRA................................................................9
9. CHANGE IN CONTROL OF COMPANY..............................................9
(a) General..............................................................9
(b) Eligibility to Receive a Severance Benefit..........................10
(c) Permanent Disability................................................10
(d) Change in Control Defined...........................................10
(e) Good Reason Defined.................................................12
(f) Notice of Termination by Employee...................................13
(g) Effect of Termination; Special Severance Benefits...................13
(h) Other Agreements....................................................14
(i) Legal Expenses......................................................14
10. EXCISE AND INCOME TAX GROSS-UP...........................................14
11. COMPETITION..............................................................15
(a) Restrictive Covenant................................................15
(b) Duration of Covenant................................................15
(c) Remedies; Reasonableness............................................16
(d) Survival of Provision...............................................16
(e) Competing Business..................................................16
(f) Change in Control...................................................17
12. DISPUTE RESOLUTION.......................................................17
(a) Mediation...........................................................17
(b) Arbitration.........................................................17
(c) Damages.............................................................18
(d) Selection of Mediator or Arbitrators................................18
(e) Expenses............................................................18
13. BENEFIT AND BINDING EFFECT...............................................18
14. NON-DISPARAGEMENT........................................................19
15. OTHER AGREEMENTS OF EMPLOYEE.............................................19
16. NOTICES..................................................................19
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17. ENTIRE AGREEMENT.........................................................19
18. GOVERNING LAW............................................................20
19. CAPTIONS.................................................................20
20. SEVERABILITY.............................................................20
21. MITIGATION...............................................................20
22. TERMINATION OF EMPLOYMENT................................................20
23. NO CONSTRUCTION AGAINST COMPANY..........................................20
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EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the 1st
day of December, 1999 between ▇▇▇ ▇▇▇▇ CORPORATION, a Delaware corporation (the
"Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Employee").
1. DEFINITIONS
Throughout this Agreement, certain defined terms will be identified by the
capitalization of the first letter of the defined word or the first letter of
each substantive word in a defined phrase. Whenever used, these terms will be
given the indicated meaning.
2. TERM OF AGREEMENT; DUTIES
(a) INITIAL TERM; RENEWAL; EMPLOYMENT PERIOD DEFINED
Employee shall be employed by Company for the duties set forth below for
the period beginning on December 1, 1999 and ending on November 30, 2000 (the
"Initial Term"), unless sooner terminated in accordance with the provisions of
this Agreement. This Agreement shall be automatically renewed at the end of the
Initial Term for additional one-year periods commencing on each December 1 and
ending on the next following November 30 (a "Renewal Term"), unless either party
serves notice of desire to terminate or modify this Agreement on the other. Such
notice must be given at least 30 days before the end of the Initial Term or the
applicable Renewal Term.
The period of time commencing as of the first day of the Initial Term and
ending on the effective date of the termination of employment of Employee under
this or any successor agreement shall be referred to as the "Employment Period."
(b) DUTIES
Employee shall be employed as the President and Chief Executive Officer of
Company. As the President and Chief Executive Officer, Employee shall supervise
and direct the entire operation of Company, and to the extent practicable, its
"Subsidiaries." Employee also shall perform such additional duties related to
the business and affairs of Company and its Subsidiaries as may be delegated to
him from time to time by the Board of Directors of the Company ("Board"). Any
additional duties delegated to Employee by the Board shall be consistent with
Employee's position as President and Chief Executive Officer and shall be of the
type customarily assigned to the President and Chief Executive Officer of a
comparable corporation. For purposes of this Agreement, the term "Subsidiary"
shall mean any corporation, partnership, joint venture, or other entity in which
Company directly or indirectly has a 20% or greater equity interest.
(c) EMPLOYEE COMMITMENTS
Employee agrees that he will faithfully, industriously, and to the best of
his ability, experience, and talents, perform all of the duties that may be
required of and from him and fulfill all of his responsibilities hereunder
pursuant to the express and explicit terms hereof, to the reasonable
satisfaction of the Board. Employee also agrees that he will devote
substantially all of his undivided time, attention, knowledge, and skills,
during customary business hours, to the business and interests of Company,
subject to such reasonable vacations and sick leave as are provided under the
general policies of Company, as they may exist from time to time, and consistent
with past practice.
(d) OTHER PROGRAMS
As a general rule, this Agreement is intended to supplement and enhance the
rights and benefits available to Employee as a senior executive officer of the
Company. Accordingly, unless this Agreement or any other agreement or plan of
Company specifically indicates otherwise, none of the rights and benefits
provided to Employee pursuant to this Agreement are intended to replace the
rights and benefits made available generally to other senior executive officers
of the Company.
3. COMPENSATION
Employee shall receive the following compensation for services:
(a) BASE SALARY
Employee shall receive "Base Salary" at the rate of $600,000 per year. Base
Salary shall be payable as nearly as possible in equal bi-weekly installments
(or in such other installments as the Company shall determine). The Base Salary
may be adjusted from time to time in accordance with the procedures established
by Company for salary adjustments for executive officers.
(b) INCENTIVE AND BENEFIT PLANS
Employee shall participate in the ▇▇▇ ▇▇▇▇ Corporation 1995 Executive
Management Incentive Plan (the "EMIP") and any successors thereto. The
Employee's incentive compensation and all other terms and conditions of
Employee's participation in the EMIP (including incentive compensation levels
and performance goals) may be changed from time to time by the Company's Board
of Directors or a Committee thereof in the exercise of its discretion. Employee
also shall have the right to participate in any and all pension or profit
sharing plans, stock purchase plans, executive retirement plans, any annuity or
group benefit plans and any medical plans and other benefit plans (other than
the Company's Management Incentive Plan ("MIP"), which is replaced by
participation in the EMIP) that are now or in the future may be maintained by
Company for its Senior Executive Officers, all in accordance with the terms and
conditions of the plans. Company will provide Employee with an automobile and an
active membership in a country club of Employee's choice in accordance with the
policies and practices applicable to Senior Executive Officers. The automobile
and country club policies for Senior Executive Officers may be modified from
time to time. For purposes of this Agreement, the term "Senior Executive
Officer" includes Employee and any ▇▇▇ ▇▇▇▇ Corporation Executive Vice
President, Senior Vice President or Vice President.
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(c) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Employee is a participant in the Company's Supplemental Executive
Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be
entered into between Employee and Company as of December 1, 1999 pursuant to
which Employee shall receive enhanced treatment for purposes of the SERP.
4. CONFIDENTIALITY
Employee covenants and agrees to hold in strictest confidence, and not
disclose to any person, firm or corporation, without the express written consent
of Company, any and all of Company's or any Subsidiary's "Confidential
Information." The term "Confidential Information" includes, but is not limited
to, information and documents concerning Company's or any Subsidiary's business,
customers, and suppliers, market methods, files, trade secrets, or other
"know-how" or techniques or information not of a published nature which shall
come into his possession, knowledge, or custody concerning the business of
Company or any Subsidiary, except as such disclosure may be required by law or
in connection with Employee's employment hereunder. The term "Confidential
Information" does not include any material that Company has already disclosed to
the public and is in the public domain. This covenant and agreement of Employee
shall survive this Agreement and continue to be binding upon Employee after the
expiration or termination of this Agreement, whether by passage of time or
otherwise so long as such information and data shall remain confidential.
Employee acknowledges that, in the event of his breach of the
confidentiality provisions of this Section 4, money damages will not
sufficiently compensate Company or the applicable Subsidiary for its injury.
Employee accordingly agrees that in addition to such money damages, Employee may
be restrained and enjoined from continuing breach of the provisions of this
Section 4 without any bond or other security. Employee also acknowledges that
any breach of this Section 4 would result in irreparable damage to Company or
the applicable Subsidiary.
5. TERMINATION DUE TO DEATH OR DISABILITY
(a) DEATH
This Agreement shall terminate upon Employee's death. Employee's estate
shall be entitled to receive the Base Salary due through the date of his death.
In addition, Employee's Base Salary (as determined pursuant to Section 3) as in
effect at the time of his death will be continued for a period of 12 calendar
months following the date of his death. The continued salary payments will be
made to Employee's spouse, if Employee is married and living with Employee's
spouse on the date of death. If Employee is not married and living with
Employee's spouse on the date of death, the continued salary payments will be
made to Employee's estate. Payments under this paragraph may be made to a
designated beneficiary, in lieu of Employee's estate, where Employee has made a
written request to Company designating a beneficiary, and the Company, in its
discretion, has approved the requested designation made by Employee. The death
benefit provided pursuant to this Section 5 is intended to be in addition to any
other death benefit provided pursuant to any other plan or program sponsored by
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the Company except the Executive Spouse Benefit authorized by the Human
Resources Committee of the Board for Senior Executive Officers of the Company,
which is replaced by this Agreement.
(b) PERMANENT DISABILITY
At Company's option, this Agreement also shall terminate in the event of
Employee's "Permanent Disability" upon notice in writing to Employee to that
effect. For purposes of this Agreement, "Permanent Disability" shall mean that
because of physical or mental illness or disability Employee shall have been
continuously unable, after any accommodation required by applicable law, to
perform his duties hereunder for a consecutive period of 180 days.
If this Agreement is terminated due to Employee's Permanent Disability,
Employee shall receive the Severance Benefits provided by Section 8.
(c) SALARY CONTINUATION
If Employee is absent from work and unable to perform his duties due to a
physical or mental illness or disability, Employee shall continue to receive
Base Salary until such time as this Agreement is terminated. Company may not
terminate this Agreement without Cause pursuant to Section 6(c) during the
period of absence. Rather, Company may only terminate this Agreement because of
Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section
6(a). The period of time during which Employee's Base Salary is continued
pursuant to this Section 5(c) shall be charged against Employee's available sick
leave and then against Employee's available vacation.
(d) LAPSE OF PROVISIONS
This Section 5 shall cease to apply following the termination of Employee's
employment pursuant to Sections 6, 7, or 9.
6. TERMINATION BY COMPANY
(a) TERMINATION FOR CAUSE
Company may terminate this Agreement for "Cause" upon written notice to
Employee. If Company terminates this Agreement for "Cause," Employee shall be
entitled receive his Base Salary through the effective date of his termination.
Employee's entitlement to receive any other amount shall be determined in
accordance with the provisions of any incentive or benefit plans in which
Employee participates on the effective date of termination.
(b) "CAUSE" DEFINED
Termination of this Agreement for "Cause" shall mean (i) breach of any
material provision of this Agreement by Employee which is not cured within a
reasonable time after receipt by Employee of written notice of such breach from
Company, or (ii) conviction, by a court of competent jurisdiction, of Employee
of any felony or any other crime involving gross depravity or dishonesty.
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(c) TERMINATION WITHOUT CAUSE
Termination of this Agreement by Company for reasons other than (i) death,
(ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial
Term or any Renewal Term shall be referred to as a termination "without Cause."
If this Agreement is terminated without Cause, Employee is entitled to receive
30 days advance written notice. This Agreement shall continue during such notice
period. The termination of this Agreement shall be effective on the 30th day
(the "Termination Date") following the day on which the notice is given (the
"Notice Date"). In the exercise of its discretion, the Company may place
Employee on a paid administrative leave during all or any part of the 30-day
notice period. During such administrative leave, Company may bar Employee from
access to any Company facility or may allow such access on such terms as Company
deems appropriate. If this Agreement is terminated without Cause, Employee shall
be entitled to receive the Severance Benefits provided by Section 8.
7. TERMINATION BY EMPLOYEE
(a) GENERAL
Employee may terminate this Agreement at any time, with or without "Good
Reason." If Employee terminates this Agreement without "Good Reason," Employee
shall provide Company with 60 days advance written notice. If Employee
terminates this Agreement with Good Reason, Employee shall provide Company with
30 days advance written notice, which notice shall clearly identify the action
or omission that Employee claims gives rise to Good Reason for termination of
this Agreement. In order to terminate this Agreement for Good Reason, the notice
of termination must be given to Company by Employee within 30 days of Employee's
receipt of notice, whether written or oral, or actual knowledge of the action or
omission that gave rise to Employee's Good Reason for termination. The
termination of this Agreement shall be effective on the last day of the required
notice period (the "Termination Date"). In the exercise of its discretion, the
Company may place Employee on a paid administrative leave during all or any part
of the 30-day or 60-day notice period. During such administrative leave, the
Company may bar Employee from access to any Company facility or may allow such
access on such terms as Company deems appropriate.
(b) GOOD REASON DEFINED
For purposes of this Agreement, "Good Reason" shall mean and include any of
the following:
(1) Without Employee's express written consent, the assignment to him
of any duties that are not reasonably consistent with his
positions, duties, responsibilities, and status with Company as
in effect on the "Relevant Date," or demotion, or a change in his
titles or offices as in effect on the Relevant Date (except as
specifically contemplated by this Agreement), or any removal of
him from or any failure to re-appoint or re-elect him to any of
such positions, except in connection with the termination of this
Agreement for Cause, Permanent Disability, as a result of his
death, by him other than for Good Reason, or by Company upon the
expiration of the Initial Term or any applicable Renewal Term.
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(2) A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time, other than a reduction of no more than 15% which applies to
all Senior Executive Officers of Company.
(3) The taking of any action by Company which would adversely affect
Employee's participation in or materially reduce his benefits
under any thrift, incentive, or compensation plan, or any
pension, life insurance, health and accident or disability plan
in which Employee is participating on the Relevant Date, whether
such plan is qualified for favorable tax treatment or otherwise,
unless a comparable replacement program is offered to Employee or
unless such action applies to all Senior Executive Officers.
(4) The termination of this Agreement by Company without Cause or any
attempted termination by Company purportedly for Cause if it is
thereafter determined that Cause did not exist under this
Agreement with respect to the termination.
(5) Breach of any material provisions of this Agreement by Company.
For purposes of this Section 7, the "Relevant Date" is the date of execution of
this Agreement. For purposes of Section 9, the "Relevant Date" is the date
specified in Section 9(e).
(c) COMPANY MAY CURE GOOD REASON
Within the 30 day notice period called for by Section 7(a), Company may
rescind or otherwise cure any action or omission relied upon by Employee as
constituting Good Reason for termination. If Company rescinds or otherwise cures
such action or omission within this period, Employee's notice of termination
will be automatically withdrawn and this Agreement will continue.
(d) EFFECT OF GOOD REASON TERMINATION
If Employee terminates this Agreement for Good Reason, Employee shall be
entitled to receive the Severance Benefits provided by Section 8 to the same
extent as if this Agreement had been terminated by Company without Cause.
(e) EFFECT OF TERMINATION WITHOUT GOOD REASON
If Employee terminates this Agreement without Good Reason, Employee shall
be entitled to receive his Base Salary through the effective date of his
termination. Employee's entitlement to receive any other amount shall be
determined in accordance with the provisions of any incentive or benefit plans
in which Employee participates on the effective date of the termination.
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8. SEVERANCE BENEFITS
(a) ELIGIBILITY
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if Employee's employment is terminated due to
Permanent Disability pursuant to Section 5(b), if this Agreement is terminated
by Company without Cause pursuant to Section 6(c), or if this Agreement is
terminated by Employee for Good Reason pursuant to Section 7. In addition,
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if the Company notifies Employee of its desire to
terminate this Agreement pursuant to Section 2(a) and at the time such notice is
given the Company does not have "Cause" to terminate Employee's employment
pursuant to Section 6. Similarly, if Company notifies Employee of its desire to
modify this Agreement at the end of any Initial or Renewal Term pursuant to
Section 2(a) and such modification provides Employee with "Good Reason" to
terminate this Agreement pursuant to Section 7, Employee shall be entitled to
receive the Severance Benefits called for by paragraph (b) if Employee rejects
such modification unless the Company agrees to the renewal of this Agreement
without the modification.
(b) SEVERANCE BENEFITS
The "Severance Benefits" to which Employee shall be entitled pursuant to
this section are limited to the following payments, benefits and reimbursements:
(1) Company will continue to pay Employee his Base Salary as set
forth in Section 3 (or as it may be adjusted from time to time),
in equal bi-weekly installments, throughout the "Severance
Period" referred to in Section 8(c):
(2) Company also shall make a single "Incentive Compensation Payment"
to Employee. The "Incentive Compensation Payment" shall equal the
maximum amount that would have been payable to Employee pursuant
to all of the terms and provisions of the Company's EMIP, as it
may be amended or replaced from time to time, had Employee's
employment continued until the end of the fiscal year of the
Company in which Employee's Termination Date occurs. (This
payment shall be in addition to any payment for a prior fiscal
year which has not yet been paid.) For purposes of calculating
the amount that would have been due to Employee pursuant to the
EMIP (i) any provision of the EMIP requiring continued employment
will be disregarded; (ii) the Company shall assume that
Employee's Base Salary would continue throughout the end of such
fiscal year at the same rate in effect on the Termination Date;
(iii) the actual performance of the Company shall be utilized;
(iv) the Company shall assume that any subjective performance
criteria or requirements were satisfied; and (v) all other
factors impacting the calculation of the amounts due will be
determined by the Company's Board of Directors or a Committee
thereof in the exercise of its discretion. The Incentive
Compensation Payment will be paid at the same time as incentive
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payments are or would, based on historical practices, be paid to
active employees. The Employee shall not be entitled to receive
any compensation or grants pursuant to the Company's Long Term
Incentive Plan, or any successor plan or program, following the
Termination Date.
(3) Company also intends that life, disability, accident and group
health benefits and coverages (each an "Insurance Benefit" and
collectively the "Insurance Benefits") substantially similar to
those which Employee was receiving immediately prior to the
Notice Date be made available to Employee throughout the
Severance Period, but Company does not intend to duplicate
Insurance Benefits provided by a successor employer. If and to
the extent that and so long as such Insurance Benefits (or an
Insurance Benefit) is not provided by a successor employer,
Company will arrange to provide such Insurance Benefit or
Insurance Benefits to Employee at a cost to Employee of not more
than the cost to Employee of similar coverage immediately prior
to the Notice Date. If an Insurance Benefit is not provided by a
successor employer and Company, after a good faith effort, is
unable to provide continued coverage to Employee with respect to
one or more of such Insurance Benefits because of restrictions
imposed by any insurance carrier that provides such Insurance
Benefit or Benefits, in lieu of the unavailable Insurance Benefit
or Benefits Company may pay Employee a monthly amount equal to
150% of the Company's share of the cost of providing such
unavailable Insurance Benefit or Benefits to comparable
executives in comparable circumstances. Such cost shall be
determined conclusively by Company. Employee shall provide
Company with such information concerning the Insurance Benefits
provided to Employee by a successor employer as Company shall
reasonably request and Company may decline to provide any
Insurance Benefits to Employee unless and until Employee provides
such information. Whether a particular Insurance Benefit provided
by a successor employer is "substantially similar" to a benefit
provided to Employee prior to the Notice Date shall be determined
by Company in the exercise of its discretion.
(4) Company will continue to provide Employee with an automobile and
an active membership in a country club in accordance with Section
3(b) and the policies and practices applicable to Senior
Executive Officers, as such policies may be modified from time to
time, throughout the Severance Period.
(5) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable but which would become exercisable within
24 months from the Termination Date if Employee's employment were
continued, shall on the Notice Date automatically become
exercisable and shall remain exercisable for 90 days thereafter.
This provision takes precedence over any Stock Option
Participation Agreement or form of grant between the Company and
Employee.
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(6) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which are subject to time-based
restrictions on the Notice Date shall, as of the Notice Date,
automatically become free of all restrictions if and to the
extent that such restrictions would have lapsed within 24 months
of the Termination Date if Employee's employment were continued.
(7) Company will pay any reasonable expenses incurred by Employee in
finding new employment and any reasonable costs of moving
Employee and his family and possessions to a new location, with
such expenses not to exceed $50,000 in the aggregate. In the
alternative, Employee may elect to receive a lump sum payment of
$50,000 in lieu of reimbursement for such expenses.
(c) SEVERANCE PERIOD
The Severance Period will be the 24 month period beginning on the
Termination Date. If the Severance Benefits are due because this Agreement was
not renewed, the Severance Period will be the 24 month period beginning on the
last day of the applicable Initial or Renewal Term.
(d) COBRA
Employee has the right to continued health care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA
continuation period shall commence on Employee's Termination Date (or if the
Severance Benefits are due because this Agreement was not renewed, the last day
of the applicable Initial or Renewal Term), but Company may be obligated to pay
a portion of the cost of continued health care coverage during the Severance
Period pursuant to Section 8(b)(3).
9. CHANGE IN CONTROL OF COMPANY
(a) GENERAL
The Board recognizes that the continuing possibility of a "Change in
Control" of Company is unsettling to Employee and other senior executives of
Company. Therefore, the arrangements set forth below are being made to help
assure a continuing dedication by Employee to his duties to Company,
notwithstanding the occurrence or potential occurrence of a "Change in Control."
In particular, the Board believes it important, should Company receive proposals
from third parties with respect to its future, to enable Employee, without being
influenced by the uncertainties of his own situation, to assess and advise the
Board whether such proposals would be in the best interests of Company and its
stockholders and to take such other action regarding such proposals as the Board
might determine to be appropriate. The Board also wishes to demonstrate to
executives of Company that Company is concerned with the welfare of its
executives and intends to see that loyal executives are treated fairly.
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(b) ELIGIBILITY TO RECEIVE A SEVERANCE BENEFIT
In view of the foregoing and in further consideration of Employee's
continued employment with Company, Company agrees that if a Change in Control of
Company occurs during the Initial Term or any Renewal Term Employee shall be
entitled to the special severance benefits provided in subparagraph (g) of this
Section 9 if prior to the expiration of 24 months after the Change in Control of
Company Employee terminates his employment with Company for Good Reason or
Company terminates Employee's employment without Cause. If Employee triggers the
application of this Section by terminating employment for Good Reason, he must
do so within 120 days following Employee's actual knowledge or receipt of
notice, whether written or oral, of the occurrence of the last event that
constitutes Good Reason.
(c) PERMANENT DISABILITY
Any attempted termination of Employee's employment by Company for reasons
of Permanent Disability pursuant to Section 5(b) following a Change in Control
shall be treated as a termination by Company without Cause unless Employee is
approved for and receives long term disability payments under Company's long
term disability plan. In addition, following a Change in Control this Agreement
may not be terminated pursuant to Section 5(b) due to Employee's Permanent
Disability unless the incapacity giving rise to the Permanent Disability occurs
prior to the occurrence of an event that might cause amounts to be payable to
Employee pursuant to this Section 9. Once payments begin pursuant to this
Section 9, this Agreement may not be terminated by Company pursuant to Section
5(b) due to Permanent Disability and any payments due pursuant to this Section 9
shall not cease or diminish on account of Employee's Permanent Disability.
(d) CHANGE IN CONTROL DEFINED
For purposes of this Agreement, a "Change in Control" and "Potential Change
in Control" Shall be defined as follows:
A "Change in Control" shall be deemed to have occurred in any or all of the
following instances:
(1) Any "person" as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Company or a corporation owned directly or
indirectly by the stockholders of Company in substantially the
same proportions as their ownership of stock of Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Company
representing 20% or more of the total voting power represented by
Company's then outstanding Voting Securities (as defined below);
or
(2) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of
Company and any new director whose election by the Board of
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Directors or nomination for election by Company's stockholders
was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or
(3) The stockholders of Company approve a merger or consolidation of
Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of
the total voting power represented by the Voting Securities of
Company or such surviving entity outstanding immediately after
such merger or consolidation; or
(4) The stockholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or
disposition by Company of (in one transaction or a series of
transactions) all or substantially all Company's assets.
A "Potential Change in Control" shall be deemed to have occurred in any or
all of the following instances:
(1) Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control;
(2) Any person (including Company) publicly announces an intention to
take or to consider taking actions which if consummated would
constitute a Change in Control;
(3) Any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of Company or a
corporation owned, directly or indirectly, by the stockholders of
Company in substantially the same proportions as their ownership
of stock of Company who is or becomes the beneficial owner,
directly or indirectly, of securities of Company representing 10%
or more of the combined voting power of the Company's then
outstanding Voting Securities, increases such person's beneficial
ownership of such securities by five percentage points (5%) or
more over the percentage so owned by such person; or
(4) The Board of Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
For purposes of this Section, the term "Voting Securities" shall mean and
include any securities of the Company which vote generally for the election of
directors.
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(e) GOOD REASON DEFINED
For purposes of this Section, "Good Reason" shall have the meaning assigned
to it in Section 7, with the following modifications:
(1) The "Relevant Date" shall be the day prior to the Change in
Control.
(2) Paragraph (2) of Section 7(b) shall read as follows:
A reduction by Company in Employee's Base Salary as in
effect on the date hereof or as the same may be increased
from time to time.
(3) Paragraph (3) of Section 7(b) shall read as follows:
The failure by Company to continue in effect any thrift,
incentive, or compensation plan, or any pension, life
insurance, health and accident or disability plan in which
Employee is participating on the Relevant Date, whether such
plan is qualified for favorable tax treatment or otherwise,
(or plans providing Employee with substantially similar
benefits), the taking of any action by Company which would
adversely affect Employee's participation in or materially
reduce his benefits under any of such plans or deprive him
of any material fringe benefit enjoyed by him as of the
Relevant Date or any later date, or the failure of the
Company to provide Employee with the number of paid vacation
days to which Employee is then entitled on the basis of his
years of service with the Company in accordance with the
Company's normal vacation policy as in effect on the
Relevant Date;
(4) Three additional elements of Good Reason shall be added as
follows:
(6) Employee is assigned to, or Company's office at which
Employee is principally employed on the Relevant Date is
relocated to, a location which would require a round-trip
commute to work from Employee's principal residence on the
Relevant Date of more than 100 miles per day.
(7) Failure of Company to obtain an agreement satisfactory to
Employee from any successor to the business, or
substantially all the assets, of Company to assume this
Agreement or issue a substantially similar agreement.
(8) The taking of any action by Company at the request of or on
behalf of any person, after the occurrence of a Potential
Change in Control, but prior to a Change in Control,
terminating this Agreement or terminating Employee other
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than for Cause; provided that, for purposes of this
subparagraph only, cause shall include willful and gross
misconduct on Employee's part that is materially and
demonstratively detrimental to the Company.
(f) NOTICE OF TERMINATION BY EMPLOYEE
Any termination by Employee under this Section 9 shall be communicated by
written notice to Company which shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such termination.
(g) EFFECT OF TERMINATION; SPECIAL SEVERANCE BENEFITS
If Employee is entitled to receive a special severance benefit pursuant to
Section 9(b) hereof, Company will provide Employee with the following special
severance benefits in lieu of the Severance Benefits to which Employee is
entitled pursuant to Section 8:
(1) Within five days following Employee's termination, a lump sum
severance payment will be made to Employee. The lump sum
severance payment shall be in an amount equal to: (i) three times
Employee's yearly Base Salary as set forth in Section 3 or as it
may be increased from time to time; plus (ii) three times the
greatest of (a) the average annual incentive compensation paid to
Employee pursuant to the EMIP (or any predecessor or successor
plan, or other similar plan in which Employee was a participant)
with respect to the five fiscal years preceding the fiscal year
in which the Change in Control occurs, or (b) an amount equal to
100% of the incentive compensation paid to Employee pursuant to
the EMIP (or any predecessor or successor plan) during the 12
month period prior to the Termination Date.
(2) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be
provided for 36 months following Employee's Termination Date
rather than for the period specified in Section 8(c). In lieu of
all fringe benefits other than those referred to in Sections
8(b)(3) and (4), Employee shall receive a lump sum payment equal
to 20% of Employee's Base Salary as set forth in Section 3 as it
may be increased from time to time.
(3) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable and which do not become exercisable
pursuant to Section 8(b)(5), shall on the Notice Date
automatically become exercisable and shall remain exercisable for
90 days thereafter.
(4) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which on the Notice Date are subject to
restrictions which do not lapse pursuant to Section 8(b)(6)
shall, as of that date, automatically become free of all
restrictions.
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Company shall amend, if necessary, any option or restricted stock agreements
entered into between Company and Employee to be consistent with paragraphs (4)
and (5).
(h) OTHER AGREEMENTS
Nothing in this Agreement is intended to modify any change of control
provisions or protections provided to Employee by the SERP.
(i) LEGAL EXPENSES
If Employee, at any time, takes any legal action against Company for breach
of this Section 9 or Section 10, Company shall reimburse Employee for all costs
and expenses incurred by Employee to pursue such legal action, regardless of the
outcome, unless the arbitrators appointed pursuant to Section 12(d) find
Employee's action to have been frivolous and without merit. Although the dispute
resolution provisions of Section 12 shall apply to any legal action involving a
breach of this Section 9 and Section 10, the provisions of this Section 9(i)
shall supersede conflicting provisions of Section 12(e).
10. EXCISE AND INCOME TAX GROSS-UP
The Internal Revenue Code of 1986 (the "Code") imposes significant tax
burdens on the Employee and Company if the total amounts received by the
Employee due to a Change in Control exceed prescribed limits. These tax burdens
include a requirement that the Employee pay a 20% excise tax on certain amounts
received in excess of the prescribed limits and a loss of deduction for Company.
If, as a result of these Code provisions, the Employee is required to pay such
excise tax, then upon written notice from the Employee to Company, Company shall
pay the Employee an amount equal to the total excise tax imposed on the Employee
(including the excise tax reimbursement due pursuant to this sentence and the
excise taxes on any federal and state tax reimbursements due pursuant to the
next sentence). If Company is obligated to pay the Employee pursuant to the
preceding sentence, Company also shall pay the Employee an amount equal to the
"total presumed federal and state taxes" that could be imposed on the Employee
with respect to the excise tax reimbursements due to the Employee pursuant to
the preceding sentence and the federal and state tax reimbursements due to the
Employee pursuant to this sentence. For purposes of the preceding sentence, the
"total presumed federal and state taxes" that could be imposed on the Employee
shall be conclusively calculated using a combined tax rate equal to the sum of
(a) the highest individual income tax rate in effect under (i) Federal tax law
and (ii) the tax laws of the state in which the Employee resides on the date
that the payment under this Section 10 is computed and (b) the hospital
insurance portion of FICA. No adjustments will be made in this combined rate for
the deduction of state taxes on the federal return, the loss of itemized
deductions or exemptions, or for any other purpose. The Employee shall be
responsible for paying the actual taxes. The amounts payable to the Employee
pursuant to this or any other agreement or arrangement with Company shall not be
limited in any way by the amount that may be paid pursuant to the Code without
the imposition of an excise tax or the loss of Company deductions. The Employee,
or his tax preparer, shall make the final determination as to the amount of
excise tax and gross-up due to Employee. Employee shall be entitled to receive
such amount upon written presentation of calculations. Company may, at its
option, pay the amount presented and preserve its right to contest, pursuant to
Section 12, any payment, and seek reimbursement. Either the Employee or Company
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may elect to challenge any excise taxes imposed by the Internal Revenue Service
and the Employee and Company agree to cooperate with each other in prosecuting
such challenges. If the Employee elects to litigate or otherwise challenge the
imposition of such excise tax, however, Company will join the Employee in such
litigation or challenge only if Company's General Counsel determines in good
faith that the Employee's position has substantial merit and that the issues
should be litigated from the standpoint of Company's best interest.
11. COMPETITION
(a) RESTRICTIVE COVENANT
In consideration of Company's agreements contained herein and the payments
to be made by it to Employee pursuant hereto, Employee agrees that, during the
duration of this restrictive covenant he will not:
(1) Without the prior written consent of the Board of Directors of
Company, engage in a Competing Business within 100 miles of the
outer boundaries of any Standard Metropolitan Statistical Area
(or such lesser geographical area as may be set by a court of
competent jurisdiction or an arbitrator) in which any of the
businesses of Company are being conducted on the date of
termination of this Agreement or within 100 miles of the outer
boundaries of any Standard Metropolitan Statistical Area (or such
lesser geographical area as may be set by a court of competent
jurisdiction or an arbitrator) in which the Company's strategic
plan or any replacement plan (the "Strategic Plan"), as in effect
on the earlier of the date of the competitive activity by
Employee or the date of termination of this Agreement, discusses
the possibility of Company conducting business within two years
following the date of termination of this Agreement; or
(2) Directly or indirectly, for himself, or on behalf of, or in
conjunction with, any other person or entity, seek to hire and/or
hire any individual who was employed by Company or any Subsidiary
immediately prior to such hiring or solicitation or during the
prior one-year period.
(b) DURATION OF COVENANT
Generally, this restrictive covenant shall apply during the Initial Term
and any Renewal Term and for the one-year period following the date of
termination of this Agreement and any renewals thereof (or such lesser period as
may be set by a court of competent jurisdiction or an arbitrator). If the
Competing Business in which Employee engages or intends to engage is a business
involving the development or management of an age-restricted community, however,
the limitations of Section 11(a)(1) shall apply during the Initial Term, any
Renewal Term and for the two-year period following the date of the termination
of this Agreement and any renewals thereof (or such lesser period as may be set
by a court of competent jurisdiction or an arbitrator). This Restrictive
Covenant shall not apply should the Agreement terminate on or after the date on
which Employee attains age 65.
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(c) REMEDIES; REASONABLENESS
Employee acknowledges and agrees that a breach by Employee of the
provisions of this Section will constitute such damage as will be irreparable
and the exact amount of which will be impossible to ascertain and, for that
reason, agrees that Company will be entitled to an injunction restraining and
enjoining Employee from violating the provisions of this Section. The right to
an injunction shall be in addition to and not in lieu of any other remedy
available to Company for such breach or threatened breach, including the
recovery of damages from Employee.
Employee expressly acknowledges and agrees that (i) this Restrictive
Covenant is reasonable as to time and geographical area and does not place any
unreasonable burden upon him; (ii) the general public will not be harmed as a
result of enforcement of this restrictive covenant; and (iii) Employee
understands and hereby agrees to each and every term and condition of this
Restrictive Covenant.
(d) SURVIVAL OF PROVISION
Termination of this Agreement, whether by passage of time or any other
cause, shall not constitute a waiver of Company's rights under this Section 11,
nor a release of Employee from his obligations thereunder.
(e) COMPETING BUSINESS
For purposes of this Agreement, Employee shall be deemed to be engaged in a
"Competing Business" if, in any capacity, including but not limited to
proprietor, partner, officer, director, or employee, he engages or participates,
directly or indirectly, in the operation, ownership, or management of any
proprietorship, partnership, corporation, or other business entity which
competes, in whole or in part, with the then actual business of Company or any
business contemplated by Company's Strategic Plan as in effect on the earlier of
the date of the competitive activity by Employee or the date of termination of
this Agreement. Indirect participation in the operation or ownership of any such
entity shall include any investment by Employee in any such entity, by way of
loan, guaranty, or stock ownership (other than ownership of 1% or less of any
class of equity or other securities of a company which is listed and regularly
traded on any national securities exchange or which is regularly traded
over-the-counter). Employee shall not be deemed to be engaged in a "Competing
Business" if, in any capacity enumerated above, he engages or participates,
directly or indirectly, in the operation, ownership, or management of any
proprietorship, partnership, corporation, or other business entity where
Employee or the business entity in which he may be involved, either directly or
indirectly, and together with any related individuals or entities, builds fewer
than 25 homes per calendar year (with the number of homes to be determined by
the number of permits pulled for such homes). At the written request of Employee
from time to time, Company shall furnish Employee with a written description of
the business or businesses in which Company is then actively engaged.
(f) CHANGE IN CONTROL
The provisions of this Section shall lapse and be of no further force or
effect if Employee's employment is terminated by Company without Cause, or by
Employee for Good Reason, following a Change in Control, or if Company gives
notice that it is involved in voluntary liquidation proceedings pursuant to
▇▇
▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code (11 U.S.C. ss.701 et seq.) or
that the trustee has been ordered by the United States Bankruptcy Court,
pursuant to a final and non-appealable order, to cease Company's operations
pursuant to 11 U.S.C. ss.1174 of the United States Bankruptcy Code.
12. DISPUTE RESOLUTION
(a) MEDIATION
Any and all disputes arising under, pertaining to or touching upon this
Agreement or the statutory rights or obligations of either party hereto, shall,
if not settled by negotiation, be subject to non-binding mediation. Excepted
from this Section 12 is the right of Company or Employee to seek preliminary
judicial relief with respect to a dispute should such action be necessary to
avoid immediate, irreparable harm or damage pending the proceedings provided for
in this Section 12. Mediation shall be before an independent mediator selected
by the parties pursuant to Section 12(d). Any demand for mediation shall be made
in writing and served upon the other party to the dispute, by certified mail,
return receipt requested, at the address specified in Section 16. The demand
shall set forth with reasonable specificity the basis of the dispute and the
relief sought. The mediation hearing will occur at a time and place convenient
to the parties in Maricopa County, Arizona, within 30 days of the date of
selection or appointment of the mediator.
(b) ARBITRATION
In the event that the dispute is not settled through mediation, the parties
shall then proceed to binding arbitration before a panel of three independent
arbitrators selected pursuant to Section 12(d). The mediator shall not serve as
an arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT
DISCRIMINATION, TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED
EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING
CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC
POLICY, SHALL BE RESOLVED PURSUANT TO THIS SECTION 12 AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION
12(a). The arbitration hearing shall occur at a time and place convenient to the
parties in Maricopa County, Arizona, within 30 days of selection or appointment
of the last of the three arbitrators. If Company has adopted a policy that is
applicable to arbitrations with executives, the arbitration shall be conducted
in accordance with said policy to the extent that the policy is consistent with
this Agreement and the Federal Arbitration Act, 9 U.S.C. ▇▇.▇▇. 1-16. If no such
policy has been adopted, the arbitration shall be governed by the then current
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association or its successor. Notwithstanding any provisions in such
rules to the contrary, the arbitrators shall issue findings of fact and
conclusions of law, and an award, within 15 days of the date of the hearing
unless the parties otherwise agree.
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(c) DAMAGES
In case of breach of contract or policy, damages shall be limited to
contract damages. In cases of intentional discrimination claims prohibited by
statute, the arbitrators may direct payment consistent with the applicable
statute. In cases of employment tort, the arbitrators may award punitive damages
if proved by clear and convincing evidence. Issues of procedure, arbitrability,
or confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S.C. ▇▇.▇▇. 1-16, except that Court review of the arbitrators' award shall be
that of an appellate court reviewing a decision of a trial judge sitting without
a jury.
The arbitrators may not award reinstatement. Instead, if the arbitrators
find that the termination by Company was not for Permanent Disability or not for
Cause or that the termination by Employee was for Good Reason, Employee shall
only be entitled to the Severance Benefits provided by Section 8 (or the special
Change in Control severance benefits provided by Section 9 in the event of a
Change in Control), and, in either case, payment of his reasonable legal
expenses in such arbitration. Until a final, binding determination has been
entered relieving Company of its duty to provide payments hereunder, Company
shall pay Employee all amounts to which he would be entitled under Section 8 if
a Change in Control has not occurred or Section 9 if a Change in Control has
occurred, calculated in either case on the assumption that Employee's employment
had been terminated without Cause.
(d) SELECTION OF MEDIATOR OR ARBITRATORS
The parties shall select the mediator from a panel list made available by
the Association. If the parties are unable to agree to a mediator within ten
days of receipt of a demand for mediation, the mediator will be chosen by
alternatively striking from a list of five mediators obtained by Company from
the Association. Employee shall have the first strike.
The parties also shall select the arbitrators from a panel list made
available by the Association. Company and Employee each shall select one
arbitrator from such panel list within ten days of receipt of such list. After
Company and Employee have each selected an arbitrator, the two arbitrators so
selected shall select the third arbitrator from such list within the next ten
days.
(e) EXPENSES
The costs and expenses of any mediator shall be borne by Company. Should
the Employee or Company, at any time, initiate arbitration for breach of this
Agreement, Company shall reimburse the Employee for all amounts spent by the
Employee to pursue such arbitration, unless the arbitrator finds the Employee's
action to have been frivolous and without merit.
13. BENEFIT AND BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon Company,
its successors and assigns, including but not limited to any corporation,
person, or other entity which may acquire all or substantially all of the assets
and business of Company or any corporation with or into which Company may be
consolidated or merged, and Employee, his heirs, executors, administrators, and
legal representatives, provided that the obligations of Employee may not be
delegated.
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14. NON-DISPARAGEMENT
Employee will not publicly disparage Company or its officers, directors,
employees, or agents and will refrain from any action which would reasonably be
expected to cause material adverse public relations or embarrassment to Company
or to any of such persons. Similarly, Company (including its officers,
directors, employees, and agents) will not disparage Employee and will refrain
from any action which would reasonably be expected to result in embarrassment to
Employee or to materially and adversely affect his opportunities for employment.
The preceding two sentences shall not apply to statements or allegations made in
any pleading filed in connection with any legal proceeding or to disclosures
required by applicable law, regulation, or order of court or governmental
agency.
15. OTHER AGREEMENTS OF EMPLOYEE
Employee represents that the execution and performance of this Agreement
will not result in a breach of any of the terms and conditions of any employment
or other agreement between Employee and any third party.
16. NOTICES
All notices hereunder shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid:
If to Company, to: ▇▇▇ ▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
If to Employee, to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Either party may change the address to which notices are to be sent to it by
giving 10 days' written notice of such change of address to the other party in
the manner above provided for giving notice. Notices will be considered
delivered on personal delivery or on the date of deposit in the United States
mail in the manner provided for giving notice by mail.
17. ENTIRE AGREEMENT
The entire understanding and agreement between the parties has been
incorporated into this Agreement, and this Agreement supersedes all other
agreements and understandings between Employee and Company with respect to the
relationship of Employee with Company.
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18. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Delaware.
19. CAPTIONS
The captions included herein are for convenience and shall not constitute a
part of this Agreement.
20. SEVERABILITY
If any one or more of the provisions or parts of a provision contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law. Any such
reformation shall be read as narrowly as possible to give the maximum effect to
the mutual intentions of Employee and Company.
21. MITIGATION
In the event that Employee's employment is terminated and payments become
due to Employee pursuant to this Agreement, Employee shall have no duty to
mitigate damages or to become re-employed by another employer.
22. TERMINATION OF EMPLOYMENT
The termination of this Agreement by either party also shall result in the
termination of Employee's employment relationship with Company in the absence of
an express written agreement providing to the contrary. Neither party intends
that any oral employment relationship continue after the termination of this
Agreement.
23. NO CONSTRUCTION AGAINST COMPANY
This Agreement is the result of negotiation between Company and Employee
and both have had the opportunity to have this Agreement reviewed by their legal
counsel and other advisors. Accordingly, this Agreement shall not be construed
for or against Company or Employee, regardless of which party drafted the
provision at issue.
▇▇▇ ▇▇▇▇ CORPORATION
By:
----------------------------------- ------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
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