Exhibit 10.21
AMENDED AND RESTATED EARNINGS
PARTICIPATION AWARD AGREEMENT
THIS AMENDED AND RESTATED EARNINGS PARTICIPATION AWARD AGREEMENT,
dated April 15, 2005 (the "Agreement"), is made by and between Avatar Holdings
Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (the
"Participant") and amends and restates in its entirety the Earnings
Participation Award Agreement (the "Original Agreement") between the Company and
the Participant, dated March 6, 2003 (the "Award Date").
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.
The Cash Award and the Stock Award (each as defined in the Original
Agreement) granted to the Participant pursuant to the Original Agreement remain
in effect as amended and restated in this Agreement.
1. AWARD. Pursuant to the provisions of the (i) Avatar Holdings Inc. Executive
Incentive Compensation Plan, as the same may be amended, restated, modified and
supplemented from time to time (the "Executive Plan") the Committee (as defined
in the Executive Plan) hereby awards to the Participant, as of the Award Date,
subject to the terms and conditions of the Executive Plan and subject further to
the other provisions herein set forth, the Cash Award and (ii) Avatar Holdings
Inc. Amended and Restated 1997 Incentive and Capital Accumulation Plan, as the
same may be amended, restated, modified and supplemented from time to time (the
"1997 Plan" and together with the Executive Plan, collectively the "Plans") the
Committee (as defined in the 1997 Plan) hereby awards to the Participant, as of
the Award Date, subject to the terms and conditions of the 1997 Plan and subject
further to the terms and conditions and other provisions herein set forth, the
Stock Award if, as of an applicable Performance Goal Test Date (as defined
below), the Performance Goal (as defined below) applicable to a Cash Award or
the Stock Award, as the case may be, is satisfied.
2. CERTAIN DEFINITIONS.
(a) Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Plans.
(b) Each reference contained in this Agreement to:
"Actual Gross Profit Amount" shall mean the Company's
cumulative Gross Profit during the Performance Period.
"Business Plan" shall mean the Company's business plan for
the period commencing on January 1, 2003 and ending on December 31,
2007, as submitted to the Compensation Committee on or prior to the
Award Date.
"Cash Award" shall mean, with respect to each fiscal year
during the Performance Period ending on a Performance Goal Test Date,
a cash payment equal to two percent (2%) of the excess, if any, of
(x) the Gross Profit earned by the Company for such fiscal year, over
(y) the Minimum Gross Profit Level for such fiscal year.
"Change in Control" shall mean any of the following events:
(a) a person or entity or group of persons or entities, acting in
concert, becomes the direct or indirect beneficial owner (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of securities of the Company representing ninety percent
(90%) or more of the combined voting power of the issued and
outstanding Common Stock; (b) the Board of Directors of the Company
approves any merger, consolidation or like business combination or
reorganization of the Company, the consummation of which would result
in the occurrence of the event described in clause (a) above, and
such transaction shall have been consummated; or (c) the Company
ceases to be engaged, directly or indirectly, and does not intend to
be engaged at any time in the foreseeable future, in any real estate
business. The date on which a Change in Control is consummated, with
respect to clauses (a) and (b), or occurs, with respect to clause
(c), is herein referred to as the "Change in Control Date."
"Common Stock" shall mean common stock, par value $1.00 per
share, of the Company.
"Excluded Amounts" shall mean, with respect to a fiscal
year of the Company, as at any date of determination, an amount equal
to the dollar amount of any Gross Profit attributable to Harbor
Islands and the Rio Rico Excluded Properties for such fiscal year.
"Fair Market Value" shall mean the average of the closing
prices of the Common Stock for the fifteen trading days ending with
and including the measuring date if the Common Stock is readily
tradeable on a national securities exchange, the National Association
of Securities Dealers Automated Quotation System or other national
market system, provided, however, if such exchange or system is not
open for business on any day during such period or the Common Stock
was not traded on any day during such period, the Fair Market Value
shall be determined as of the most recent fifteen trading days ending
with and including the measuring date on which such exchange or
system shall have been open for business and the Common Stock was
traded, and if the Common Stock is not readily tradeable as set forth
above, Fair Market Value shall mean the amount determined in good
faith by the Committee as the fair market value of the Common Stock
of the Company.
"Gross Profit" shall mean, with respect to a fiscal year of
the Company, the excess, if any, of (x) the sum of (i) the amount set
forth in the Company's audited Consolidated Statements of Operations
as set forth in the Company's annual report on Form 10-K (the "Income
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Statement") for such fiscal year with respect to the line item "Net
income (loss)" plus (ii) the amount, if any, set forth in the
Company's Income Statement for such fiscal year with respect to the
line item "Income tax expense (benefit)", to the extent that there is
"Income tax expense" less (iii) the amount, if any, set forth in the
Company's Income Statement for such fiscal year with respect to the
line item "Income tax expense (benefit)", to the extent that there is
"Income tax (benefit)" plus (iv) the amount(s), if any, set forth in
the Company's Income Statement for such fiscal year relating to any
income tax expense included in any income or (loss) attributable to
the discontinued operations and/or extraordinary items set forth in
the Income Statement less (v) the amount(s), if any, set forth in the
Company's Income Statement for such fiscal year relating to any
income tax (benefit) included in any income or (loss) attributable to
such discontinued operations and/or extraordinary items set forth in
the Income Statement, over (y) the Excluded Amounts for such fiscal
year.
"Harbor Islands" shall mean the development and/or sale of
the Company's property in Hollywood, Florida, generally known by the
Company as parcels 1, 8 and 9 at "Harbor Islands."
"Minimum Cumulative Gross Profit Level" shall mean that as
of the Last Day of the Performance Period (x) the Actual Gross Profit
Amount is greater than (y) the Target Gross Profit Amount.
"Minimum Gross Profit Level" shall mean the Gross Profit
set forth opposite each fiscal year ending on the dates set forth
below:
FISCAL YEAR END GROSS PROFIT
--------------- ------------
December 31, 2003 $10,000,000
December 31, 2004 $12,000,000
December 31, 2005 $14,400,000
December 31, 2006 $17,280,000
December 31, 2007 $20,736,000
"Payment Date" shall have the meaning ascribed to such term
in Section 3(c).
"Performance Goal" shall mean (i) in the case of the Cash
Award, the achievement of the Minimum Gross Profit Level in any
fiscal year, ending on December 31, during the Performance Period and
(ii) in the case of the Stock Award, the achievement of the Minimum
Cumulative Gross Profit Level for the entire Performance Period.
"Performance Goal Test Date" shall mean with respect to the
Cash Award, December 31 of each year within the Performance Period
and with respect to the Stock Award, the Last Day of the Performance
Period.
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"Performance Period" shall mean the period commencing
January 1, 2003 and ending on December 31, 2007 (December 31, 2007,
being the "Last Day of the Performance Period").
"Rio Rico Excluded Properties" shall mean those parcels of
land not suitable for development in accordance with the Company's
current Business Plan due to environmental factors located in the
Company's property in Rio Rico, Arizona, generally known by the
Company as "Rio Rico".
"Stock Award" shall mean a grant of a number of shares of
Common Stock having a Fair Market Value on the Payment Date equal to
two percent (2%) of the excess, if any, of (x) the Actual Gross
Profit Amount over (y) the Target Gross Profit Amount.
"Target Gross Profit Amount" shall mean $186,956,000.
3. TERMS AND CONDITIONS. The Cash Award and the Stock Award (together, the
"Awards") evidenced by this Agreement are subject to the following terms and
conditions:
(a) The payment of performance-based compensation described herein is
contingent upon the achievement of the Performance Goal applicable to a Cash
Award or the Stock Award, as the case may be.
(b) Subject to Section 4 hereof (i) the Participant shall be entitled
to receive a payment on the related Payment Date pursuant to the Cash Award if
the applicable Performance Goal is satisfied on the applicable Performance Goal
Test Date and (ii) the Participant shall be entitled to receive on the related
Payment Date the Common Stock pursuant to the Stock Award if the applicable
Performance Goal is satisfied on the applicable Performance Goal Test Date.
(c) The applicable Committee shall determine whether a Performance
Goal has been met as of the applicable Performance Goal Test Date and, (i) if it
has, shall so certify in writing and ascertain the amount of cash to be paid, if
any, or Common Stock to be issued, if any, to the Participant and (ii) if it has
not, shall so certify in writing with a brief explanation as to the methodology
and calculation of the Committee in determining that such Performance Goal has
not been met. Payments of cash, if any, or the issuance of Common Stock, if any,
pursuant to the Awards shall be made to the Participant, in each case within
thirty (30) days following the filing with the Securities and Exchange
Commission of an annual report on Form 10-K (which contains audited financial
statements) for the year ended as of the applicable Performance Goal Test Date
(each such date being a "Payment Date").
(d) Notwithstanding anything to the contrary contained in this
Agreement, in the event a Change in Control occurs during the Performance
Period, (i) the Participant shall no longer be entitled to receive any issuance
of shares of Common Stock pursuant to the Stock Award and (ii) the Participant
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shall be entitled to receive a pro rata portion of the Cash Award (as of the
Change in Control Date) for the fiscal year in which such Change in Control
occurs. The Committee shall determine the basis, methodology and calculation
for, and any estimates used in, determining the prorated Actual Gross Profit
Amount and prorated Minimum Gross Profit Level for the portion of the fiscal
year preceding the Change in Control Date. The determination of the Committee as
to any such partial award shall be final and binding on all parties, including
the Participant and the Company. Such prorated Cash Award shall be paid to the
Participant on or promptly following the Change in Control Date.
4. LIMITATIONS ON COMPENSATION. Notwithstanding anything to the contrary herein,
the maximum payment of cash pursuant to the Cash Award or the issuance of Common
Stock pursuant to the Stock Award to the Participant hereunder shall be subject
to the limitations in the Plans and the Participant's employment agreement with
the Company or a subsidiary thereof, each as may be amended from time to time.
5. TERMINATION OF EMPLOYMENT.
(a) For purposes of this Section 5, the terms Cause, Without Cause,
Good Reason, Without Good Reason and Disability shall have the meanings ascribed
to such terms in the Participant's amended and restated employment agreement
with Avatar Properties Inc. ("Avatar Properties"), dated as of the date hereof,
as amended or restated from time to time; provided, however, if the Participant
is no longer employed pursuant to such employment agreement, each such term
shall have the meaning ascribed to it in the employment agreement last in effect
which contains such defined term.
(b) If the Participant's employment with Avatar Properties is
terminated by Avatar Properties for Cause or by the Participant Without Good
Reason, in addition to any other consequences of such termination provided for
in this Agreement or any other agreement, notwithstanding Section 3 hereof,
Participant shall forfeit any right to cash payments or Common Stock issuances
that would otherwise accrue pursuant to this Agreement on or after the date of
such termination.
(c) If the Participant's employment with Avatar Properties is
terminated by Avatar Properties Without Cause or by the Participant for Good
Reason, the Participant shall be entitled to continue to receive such cash
payments or Common Stock issuances as would otherwise be made pursuant to this
Agreement as though the Participant's employment had not been terminated.
(d) If the Participant's employment with Avatar Properties is
terminated due to the Participant's death or Disability, notwithstanding Section
3 hereof:
(i) the Participant shall be entitled to receive only that
portion of any cash payments or Common Stock issuances otherwise
payable pursuant to Section 3(c) hereof following such termination,
equal to the product of (x) a fraction (which in no event shall
exceed one (1)) the numerator of which is the number of completed
whole months elapsed after the first day of the Performance Period to
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the date of death or Disability, as the case may be, and the
denominator of which is the number of whole months from the first day
of the Performance Period until the applicable Performance Goal Test
Date and (y) the amount of any cash payments or Common Stock
issuances that would have been payable pursuant to Section 3(c)
hereof if the Participant remained an employee of Avatar Properties
through and including the Last Day of the Performance Period;
provided, however, that with respect to cash payments pursuant to the
Cash Award, the Participant shall only be eligible to receive a cash
payment for the fiscal year in which the Participant's employment was
terminated for death or Disability, as the case may be, and the
Participant shall not be eligible for any additional cash payments;
and
(ii) the Participant will have no right to any other
payments hereunder.
Any payments shall be made to the Participant (or the executor or
administrator of the deceased Participant's estate or the person or persons to
whom the deceased Participant's rights shall pass by will or the laws of descent
or distribution, as applicable) no later than the relevant Payment Date.
6. FORFEITURE UPON BREACH OF RESTRICTIVE COVENANTS. Notwithstanding anything to
the contrary set forth in this Agreement, if the Participant breaches any
provision relating to the Participant's covenant to keep information
confidential, not to compete, not to solicit or similar restrictive covenant
contained in the Participant's employment agreement or any other agreement with
the Company or any of its subsidiaries or affiliates (each of the foregoing
entities being referred to herein collectively as the "Avatar Entities" and each
as an "Avatar Entity"), after the expiration of any notice and cure period, then
in addition to any other rights or remedies arising from or relating to such
breach the Participant shall forfeit any right to any cash payments or Common
Stock issuances that would otherwise accrue pursuant to this Agreement on or
after the date of such breach.
7. CLAWBACK; ADDITIONAL PAYMENTS; NO OFFSET BY PARTICIPANT; COMPANY OFFSET.
(a) In the event that the Company's financial statements with respect
to any fiscal year (or portion thereof) within the Performance Period are
restated within eighteen (18) months following the payment to the Participant of
cash pursuant to the Cash Award or the issuance to the Participant of Common
Stock pursuant to the Stock Award such that Gross Profit is less than previously
reported, the Participant shall pay to the Company upon demand by the Company
following the filing of such restated financial statements with the Securities
and Exchange Commission, an amount equal to the sum of (i) the excess of (A) the
Excess Bonus Payments (as defined below) over (B) the hypothetical income tax
liability attributable to such Excess Bonus Payments (as determined by the
Committee by applying the highest marginal United States federal, state and
local individual income tax rates applicable to an individual resident of Coral
Gables, Florida for the relevant taxable period, taking into account the
deductibility of state and local income taxes for federal income tax purposes),
and (ii) as determined by the Committee, the present value of any tax benefits
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accruing to the Participant as a result of making any payments pursuant to this
Section 7(a) to the Company. For purposes of the preceding sentence, "Excess
Bonus Payments" shall mean an amount equal to the sum of (A) the difference
between (x) the amount of the cash payment pursuant to the Cash Award paid to
the Participant with respect to any fiscal year (or portion thereof) in which
the audited financial statements have been restated and (y) the amount that cash
payment pursuant to the Cash Award would have been if the Company had used the
restated financial statements to determine the amount of the Company's Gross
Profit for the applicable Performance Goal Test Date and (B) the difference
between (x) the Fair Market Value on the Payment Date of the Common Stock issued
pursuant to the Stock Award and (y) the amount that the Fair Market Value of the
Common Stock would have been on the Payment Date if the Company had used the
restated financial statements to determine the amount of the Company's Actual
Gross Profit Amount on the Last Day of the Performance Period.
(b) In the event that the Company's financial statements with respect
to any fiscal year (or portion thereof) within the Performance Period are
restated within eighteen (18) months following the payment to the Participant of
cash pursuant to the Cash Award or issuance to the Participant of Common Stock
pursuant to the Stock Award such that Gross Profit is greater than previously
reported, the Company shall pay to the Participant upon demand by the
Participant following the filing of such restated financial statements with the
Securities and Exchange Commission, an amount (the "Lesser Bonus Payments")
equal the sum of (A) the difference between (x) the amount that the cash payment
pursuant to the Cash Award would have been if the Company had used the restated
financial statements to determine the amount of the Company's Gross Profit for
the applicable Performance Goal Test Date less (y) the amount of the cash
payment pursuant to the Cash Award paid to the Participant with respect to any
fiscal year (or portion thereof) in which the audited financial statements have
been restated and (B) the difference between (x) the amount that the Fair Market
Value of the Common Stock issued to the Participant pursuant to the Stock Award
would have been on the Payment Date if the Company had used the restated
financial statements to determine the amount of the Company's Actual Gross
Profit Amount on the Last Day of the Performance Period and (y) the Fair Market
Value on the Payment Date of the Common Stock issued pursuant to the Stock
Award. At the option of the Company, the amount of the Lesser Bonus Payments
attributable to the Stock Award may be payable in cash or Common Stock.
(c) The Participant shall be obligated to pay to the Company any
amount due pursuant to this Section 7 regardless of whether the Participant has
or claims to have any claim against any of the Avatar Entities, and the
Participant shall have no right to offset any amount due or claimed to be due
from any of the Avatar Entities. The Company shall be obligated to pay to the
Participant any amount due pursuant to this Section 7 regardless of whether the
Company has or claims to have any claim against the Participant, and the Company
shall have no right to offset any amount due or claimed to be due from the
Participant or any of its affiliates.
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(d) In the event that the Participant has failed to repay any amount
required pursuant to Section 7(a) above, the Company shall be entitled to offset
such amount against any amounts due from the Company to the Participant.
(e) The foregoing provisions of this Section 7 shall not be
applicable to any restatement, after the consummation of a Change in Control (as
defined in clauses (a) and (b) of the definition of "Change in Control" above),
of the Company's financial statements with respect to any fiscal year (or
portion thereof) within the Performance Period.
8. TAXES. Any cash payment pursuant to a Cash Award or Common Stock issuance
pursuant to the Stock Award shall be net of any amounts required to be withheld
pursuant to applicable federal, state, local and foreign tax withholding
requirements. The Company shall have the right to withhold the amount of such
taxes from any other sums due or to become due from the Company to the
Participant as the Committee shall prescribe. In connection with any issuance of
Common Stock pursuant to the Stock Award, the Company may require the
Participant to remit to it an amount sufficient to satisfy such tax withholding
requirements prior to the delivery of any certificates for such Common Stock.
The Committee may, in its discretion and subject to such rules as it may adopt
(including any as may be required to satisfy applicable tax and/or non-tax
regulatory requirements), permit the Participant to pay all or a portion of the
federal, state, local and foreign withholding taxes arising in connection with
the Stock Award and any distribution of shares of Common Stock in respect
thereof by electing to have the Company withhold shares of Common Stock having a
Fair Market Value equal to the amount of tax to be withheld, such tax calculated
at rates prescribed by statute or regulation.
9. NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement does not confer upon the
Participant any right to continued employment by any of the Avatar Entities, nor
shall it interfere in any way with the right of the Participant's employer to
terminate the Participant's employment at any time for any reason or no reason.
10. NO OBLIGATION TO PURSUE PROJECTS. This Agreement shall in no way obligate
the Company to pursue any projects, developments or sales of any assets, and the
Company may limit, abandon or change any projects, developments or sales of any
assets at any time in its sole discretion and the Company shall have no
obligation to take any action or provide any financing with respect to any
projects, developments or sales of any assets.
11. UNSECURED CREDITOR STATUS; NO PARTNERSHIP. The Participant shall rely solely
upon the unsecured promise of the Company, as set forth herein, for payment
hereunder, and nothing herein contained shall be construed to give to or vest in
the Participant or any other person now or at any time in the future, any right,
title, interest, or claim in or to any specific asset, fund, reserve, account,
insurance or annuity policy or contract, or other property of any kind
whatsoever owned by the Company, or in which the Company may have any right,
title, or interest, nor at any time in the future. This Agreement is an
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agreement to pay compensation for services provided by the Participant and is
not a partnership or joint venture and is not intended to create a partnership
or joint venture between the Company and the Participant or any other person.
The Participant shall take no position inconsistent with this characterization.
12. ASSIGNMENT; SUCCESSORS.
(a) The Cash Award, Stock Award and any interest of the Participant
in any such awards may not be sold, assigned, transferred, pledged, hypothecated
or otherwise disposed of. Any attempt to transfer any such Awards in
contravention of this Section 12(a) is void ab initio. The Awards shall not be
subject to execution, attachment or other process.
(b) The Company's rights and obligations hereunder may be assigned or
transferred by the Company to and may be assumed by and become binding upon and
may inure to the benefit of any Avatar Entity or successor thereof. The term
"successor" shall mean, with respect to any Avatar Entity, any other corporation
or other business entity which, by merger, consolidation, purchase of assets, or
otherwise, acquires all or a material part of the assets of such Avatar Entity.
(c) In the event of the Participant's death, the Participant's rights
and obligations hereunder shall be binding upon and inure to the benefit of the
Participant's heirs and legal representatives.
13. CONSTRUCTION. The Plans and this Agreement will be construed by and
administered under the supervision of the applicable Committee in such
Committee's sole and absolute discretion, and all determinations of such
Committee will be final and binding on the Participant.
14. NOTICES. Any notice required or permitted under this Agreement shall be
deemed given when delivered personally, or when deposited in a United States
Post Office, postage prepaid, addressed, as appropriate, (i) to the Participant
at the last address specified in the Participant's employment records, or such
other address as the Participant may designate in writing to the Company, or
(ii) to the Company, Avatar Holdings Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer, with a copy to the Company's
Corporate Secretary, or such other address as the Company may designate in
writing to the Participant.
15. FAILURE TO ENFORCE NOT A WAIVER. The failure of either party hereto to
enforce at any time any provision of this Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.
16. GOVERNING LAW. This Agreement shall be governed by and construed according
to the laws of the State of Delaware, without regard to the conflicts of laws
provisions thereof.
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17. INCORPORATION OF PLANS. Each of the Plans is hereby incorporated by
reference and made a part of this Agreement, and this Agreement shall be subject
to the terms of the Plans, as the Plans may be amended from time to time.
18. STOCKHOLDER APPROVAL OF 1997 PLAN. In the event that the requisite number of
shares of Common Stock reserved for issuance under the 1997 Plan to issue the
Common Stock pursuant to the Stock Award are not available, the Company shall
undertake to submit an amendment to the 1997 Plan (the "1997 Plan Amendment"),
which increases the number of shares available for issuance thereunder to
satisfy the Company's obligations pursuant to the Stock Award for approval by
stockholders at an annual meeting or meetings (or at a special meeting or
special meetings) after it is determined that additional shares of Common Stock
are needed for issuance pursuant to the Stock Award. The Participant agrees that
the failure of the Company's stockholders to approve the 1997 Plan Amendment
(and any adverse financial consequences to Participant resulting therefrom)
shall not constitute a "good reason" under the Participant's employment with the
Company or any other Avatar Entity.
19. 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.
20. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be an original but all of which together shall represent one
and the same agreement.
21. MISCELLANEOUS. This Agreement cannot be modified or terminated orally. This
Agreement, the Plans and the letter agreement, dated as of the date hereof,
among the Company, Avatar Properties and the Participant, contain the entire
agreement between the parties relating to the subject matter hereof. The section
headings herein are intended for reference only and shall not affect the
interpretation hereof.
(signature page follows)
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
AVATAR HOLDINGS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇