Exhibit 10.1
Employment Agreement
This EMPLOYMENT AGREEMENT is made, entered into, and is effective as of
this 18th day of September 1995 (the "Effective Date"), by and between The
▇▇▇▇▇▇ Group, Inc., a Maryland corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Executive").
WHEREAS, the Company desires to retain the employment of the Executive as
the Company's Chief Financial Officer, and the Executive desires to serve the
Company in such capacity; and
WHEREAS, the parties hereto desire to set forth their agreement with
respect to the terms and provisions of the Executive's employment with the
Company as the Company's Chief Financial Officer.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:
Article 1. Term of Employment
The Company hereby agrees to employ the Executive and the Executive hereby
agrees to continue to serve the Company, in accordance with the terms and
conditions set forth herein, for an initial period of three (3) years,
commencing as of the Effective Date of this Agreement, as indicated above;
subject, however, to earlier termination as expressly provided herein.
The initial three (3) year period of employment automatically shall be
extended for one (1) additional year at the end of the initial three (3) year
term, and then again after each successive year thereafter. However, either
party may terminate this Agreement at the end of the initial three (3) year
period, or at the end of any successive one (1) year term thereafter, by
giving the other party written notice of intent not to renew, delivered at
least three (3) months prior to the end of such initial period or successive
term.
In the event such notice of intent not to renew is properly delivered, this
Agreement, along with all corresponding rights, duties, and covenants,
automatically shall expire at the end of the initial period or successive term
then in progress.
However, regardless of the above, if at any time during the initial period
of employment, or successive term, a Change-in-Control of the Company occurs
(as defined in Article 7 herein), then the term of this Agreement shall be the
longer of: (a) two (2) years beyond the month in which the effective date of
such Change-in-Control occurs; or (b) the term as otherwise provided in this
Article 1.
Article 2. Position and Responsibilities
During the term of this Agreement, the Executive agrees to serve as Chief
Financial Officer of the Company and as a member of the
Company's Board of Directors if so elected. In his capacity as Chief Financial
Officer of the Company, the Executive shall report directly to the Company's
Chief Executive Officer, and shall have primary responsibility for formulating
financial policy and plans and providing overall direction for the accounting,
tax, insurance, budget, credit, treasury and information systems functions of
the Company. The Executive shall have the same status, privileges, and
responsibilities normally inherent in such capacities in corporations of
similar size and character.
Article 3. Standard of Care
During the term of this Agreement, the Executive agrees to devote
substantially his full time, attention, and energies to the Company's business
and shall not be engaged in any other business activity, whether or not such
business activity is pursued for gain, profit, or other pecuniary advantage.
However, subject to Section 9.1 herein, the Executive may serve as a director
of other companies so long as such service is not injurious to the Company.
The Executive covenants, warrants, and represents that he shall:
(a) Devote his full and best efforts to the fulfillment of his employment
obligations; and
(b) Exercise the highest degree of loyalty and the highest standards of
conduct in the performance of his duties.
This Article 3 shall not be construed as preventing the Executive from
investing assets in such form or manner as will not require his services in
the daily operations of the affairs of the companies in which such investments
are made.
Article 4. Compensation
As remuneration for all services to be rendered by the Executive during the
term of this Agreement, and as consideration for complying with the covenants
herein, the Company shall pay and provide to the Executive the following:
4.1 Base Salary. The Company shall pay the Executive a Base Salary
in an amount which shall be established from time to time by the Board of
Directors of the Company or the Board's designee provided; however, that such
Base Salary shall not be less than $275,000 per year. This Base Salary shall
be paid to the Executive in equal biweekly installments throughout the year,
consistent with the normal payroll practices of the Company.
The Executive's Base Salary shall be reviewed at least annually during the
term of this Agreement to ascertain whether, in the judgment of the Board or
the Board's designee, such Base Salary should be increased, based primarily on
the performance of the Executive during the year and on the then current rate
of inflation. If so increased, the Base Salary as stated above shall,
likewise, be increased for all purposes of this Agreement.
4.2 Annual Bonus. The Executive's targeted cash bonus under the Company's
annual bonus program (the "Bonus") shall not be less than 75 percent of the
Executive's Base Salary. Except as otherwise provided in Article 6 and 7
hereof, any Bonus earned under the program shall be payable to the Executive
in cash within sixty (60) days after the end of each fiscal year of the
Company during the term of this Agreement, commencing with the fiscal year
ending December 31, 1995.
4.3 Incentive Programs. The Executive shall participate in such stock
option, incentive, and performance award programs as are made available
generally to executives of the Company. With respect to any such program, the
Company shall provide the Executive with the opportunity to earn an award at a
level which is commensurate with the opportunity typically offered to
executives having the same or similar duties and responsibilities as the
Executive at companies similar in size and in character to the Company;
provided, however, that the Executive's opportunity shall be at least equal to
the highest level provided to any Senior Vice President of the Company.
4.4 Retirement Benefits. The Company shall provide to the Executive
participation in all Company qualified defined benefit and defined
contribution retirement plans (if any), subject to the eligibility and
participation requirements of such plans.
4.5 Employee Benefits. The Company shall provide to the Executive all
benefits to which other executives and employees of the Company are entitled
to receive, as commensurate with the Executive's position, subject to the
eligibility requirements and other provisions of such arrangements. Such
benefits shall include, but not be limited to, split-dollar and group term
life insurance, comprehensive health and major medical insurance, dental and
short-term and long-term disability.
4.6 Perquisites. The Company shall provide to the Executive, at the
Company's cost, all perquisites to which other similarly situated executives
of the Company are entitled to receive and such other perquisites which are
suitable to the character of Executive's position with the Company and
adequate for the performance of his duties hereunder. Without limiting the
generality of the foregoing, the Company shall provide to the Executive a
Personal Health and Services Allowance having a total annual value at least
equal to five percent (5%) of the Executive's Base Salary.
4.7 Right to Change Plans. By reason of Sections 4.3, 4.4, 4.5, and 4.6
herein, the Company shall not be obligated to institute, maintain, or refrain
from changing, amending, or discontinuing any benefit plan, program, or
perquisite, so long as such changes are similarly applicable to executive
employees generally.
Article 5. Expenses
The Company shall pay, or reimburse the Executive, for all ordinary and
necessary expenses, in a reasonable amount, which the Executive incurs in
performing his duties under this Agreement including, but not limited to,
travel, entertainment, professional dues and subscriptions, and all dues,
fees, and expenses associated with membership in various professional,
business, and civic associations and societies of which the Executive's
participation is in the best interest of the Company.
Article 6. Employment Terminations
6.1 Termination Due to Retirement or Death. In the event the Executive's
employment is terminated while this Agreement is in force by reason of
Retirement (as defined under the then established rules of the Company's tax-
qualified retirement plan) or death, the Executive's benefits shall be
determined in accordance with the Company's retirement, survivor's benefits,
insurance, and other applicable programs of the Company then in effect. Upon
the effective date of such termination, the Company's obligation under this
Agreement to pay and provide to the Executive the elements of pay described in
Article 4 herein shall immediately expire, except to the extent that the
benefits described in Sections 4.4 and 4.5 continue after Retirement under the
terms of the benefit plans and programs which apply generally to the Company's
executives, and except that the Executive shall receive all other rights and
benefits that he is vested in pursuant to other plans and programs of the
Company. In addition, the Company shall pay to the Executive (or the
Executive's beneficiaries, or estate, as applicable), a pro rata share of his
Bonus for the fiscal year in which employment termination occurs, based on the
results of the Company for such fiscal year. This pro rata Bonus amount shall
be determined by multiplying the Bonus which otherwise would apply for such
full fiscal year by a fraction, the numerator of which is the number of days
in such fiscal year prior to the date of employment termination and the
denominator of which is the total number of days in such fiscal year. The pro
rata Bonus shall be paid within sixty (60) days of the end of such fiscal
year.
6.2 Termination Due to Disability. In the event that the Executive becomes
Disabled (as defined below) during the term of this Agreement and is,
therefore, unable to perform his duties herein for more than one hundred
twenty (120) total calendar days during any period of twelve (12) consecutive
months, or in the event of the Board's reasonable expectation that the
Executive's Disability will exist for more than a period of one hundred twenty
(120) calendar days, the Company shall have the right to terminate the
Executive's active employment as provided in this Agreement. However, the
Board shall deliver written notice to the Executive of the Company's intent to
terminate for Disability at least thirty (30) calendar days prior to the
effective date of such termination.
A termination for Disability shall become effective upon the end of the
thirty (30) day notice period. Upon such effective date, the Company's
obligation to pay and provide to the Executive the elements of pay described
in Article 4 herein shall immediately expire, except to the extent that the
benefits described in Sections 4.4 and 4.5 continue after Disability under the
terms of the benefit plans and programs which apply generally to the Company's
executives, and except that the Executive shall receive all rights and
benefits that he is vested in pursuant to other plans and programs of the
Company. In addition, the Company shall pay to the Executive a pro rata share
of his Bonus for the fiscal year in which employment termination occurs, based
on the results for such fiscal year, determined as provided in Section 6.1
herein. The pro rata Bonus shall be paid within sixty (60) days of the end of
such fiscal year.
The term "Disability" shall mean, for all purposes of this Agreement, the
incapacity of the Executive, due to injury, illness, disease, or bodily or
mental infirmity, to engage in the performance of substantially all of the
usual duties of employment with the Company as contemplated by Article 2
herein, such Disability to be determined by the Board of Directors of the
Company upon receipt and in reliance on competent medical advice from one (1)
or more individuals, selected by the Board, who are qualified to give such
professional medical advice.
It is expressly understood that the Disability of the Executive for a
period of one hundred twenty (120) calendar days or less in the aggregate
during any period of twelve (12) consecutive months, in the absence of any
reasonable expectation that his Disability will exist for more than such a
period of time, shall not constitute a failure by him to perform his duties
hereunder and shall not be deemed a breach or default and the Executive shall
receive full compensation for any such period of Disability or for any other
temporary illness or incapacity during the term of this Agreement.
6.3 Voluntary Termination by the Executive. The Executive may terminate
this Agreement at any time by giving the Board of Directors of the Company
written notice of intent to terminate, delivered at least ninety (90) calendar
days prior to the effective date of such termination.
Upon the effective date of such termination, following the expiration of
the ninety (90) day notice period, the Company shall pay the Executive his
full Base Salary, at the rate then in effect as provided in Section 4.1
herein, through the effective date of termination, plus all other benefits to
which the Executive has a vested right to at that time (for this purpose, the
Executive shall not be paid any Bonus with respect to the fiscal year in which
voluntary termination under this Section 6.3 occurs). In the event
that the terms and provisions of Section 6.6 or Article 7 herein do not apply
to such termination, the Company and the Executive thereafter shall have no
further obligations under this Agreement. However, in the event the terms and
provisions of Section 6.6 or Article 7 herein apply, the payments and benefits
set forth therein shall apply.
6.4 Involuntary Termination by the Company Without Cause. At all times
other than during a "Change-in-Control Period" (defined in Section 7.4
herein), the Board may terminate the Executive's employment, as provided under
this Agreement, at any time, for reasons other than death, Disability,
Retirement, or for Cause, by notifying the Executive in writing of the
Company's intent to terminate, at least thirty (30) calendar days prior the
effective date of such termination.
Upon the effective date of such termination, following the expiration of
the thirty (30) day notice period, the Company shall pay to the Executive a
lump-sum cash payment equal to the greater of: (a) the Base Salary then in
effect for the remaining term of this Agreement; or (b) eighteen (18) full
months of the Base Salary in effect as of the effective date of termination.
In addition, the Company shall provide the Executive a continuation of his
health and welfare benefits for the longer of: (x) the remaining term of the
Agreement; or (y) eighteen (18) full months at the employee rates then in
effect. If for any reason the Company is unable to continue health and
welfare benefits as required by the preceding sentence, the Company shall
either provide equivalent benefits to the Executive or pay to the Executive a
lump-sum cash payment equal to the value of the benefits which the Company is
unable to provide. Continuation of health benefits under this Section 6.4
will count against, and will not extend, the period during which benefits are
required to be continued under COBRA.
In addition, the Company shall make a prorated payment of the Executive's
targeted Bonus for the fiscal year in which termination occurs, calculated
based upon the performance of the Company through the end of the month
immediately preceding the effective date of the termination. Payment of the
Bonus shall be made in cash, in one lump sum, at the same time payment of Base
Salary is made pursuant to this Section 6.4. Further, the Company shall pay
the Executive all other benefits to which the Executive has a vested right at
the time, according to the provisions of each governing plan or program. The
Company and the Executive thereafter shall have no further obligations under
this Agreement.
For purposes of this Section 6.4: (i) with respect to the fiscal year in
which termination occurs, the Executive shall be given credit under the
Company's Long-Term Retirement and Incentive Plan or any successor plan for
the portion of the fiscal year in which this Agreement is in effect, and shall
be vested pro rata for purposes of prior and current year awards; and (ii) all
vested awards under any incentive programs shall be paid notwithstanding any
provision of the governing plan or program calling for forfeiture of benefits
upon
termination. If for any reason the Company is unable to comply with the
preceding sentence, the Company shall pay the Executive a lump-sum cash
payment equal to the value of the benefits or awards it is unable to vest, pay
or give credit for.
If the Executive's employment is terminated for any of the reasons set
forth in Article 7 herein, the Executive shall be entitled to receive the
benefits provided in Article 7 herein.
6.5 Termination For Cause. Nothing in this Agreement shall be construed to
prevent the Board from terminating the Executive's employment under this
Agreement for "Cause."
"Cause" shall be determined by the Board in the exercise of good faith and
reasonable judgment; and shall be defined as the conviction of the Executive
for the commission of an act of fraud, embezzlement, theft, or other criminal
act constituting a felony under U.S. laws involving moral turpitude; or the
gross neglect of the Executive in the performance of any and all material
covenants under this Agreement, for reasons other than the Executive's death,
Disability, or Retirement. The Company's Board of Directors, by majority vote,
shall make the determination of whether Cause exists, after providing the
Executive with notice of the reasons the Board believes Cause may exist, and
after giving the Executive the opportunity to respond to the allegation that
Cause exists.
In the event this Agreement is terminated by the Board for Cause, the
Company shall pay the Executive his Base Salary through the effective date of
the employment termination and the Executive shall immediately thereafter
forfeit all rights and benefits (other than vested benefits) he would
otherwise have been entitled to receive under this Agreement. The Company and
the Executive thereafter shall have no further obligations under this
Agreement.
6.6 Termination by Executive for Good Reason. At any time during the term
of this Agreement, the Executive may terminate this Agreement for Good Reason
(as defined below) by giving the Board of Directors of the Company thirty (30)
calendar days written notice of intent to terminate, which notice sets forth
in reasonable detail the facts and circumstances claimed to provide a basis
for such termination.
Upon the expiration of the thirty (30) day notice period, the Good Reason
termination shall become effective, and the Company shall pay and provide to
the Executive the benefits set forth in this Section 6.6 (or, in the event of
termination for Good Reason within the Change-in-Control Period, the benefits
set forth in Section 7.1 herein).
Good Reason shall mean, without the Executive's express written consent,
the occurrence of any one or more of the following:
(a)The assignment of the Executive to duties materially inconsistent with
the Executive's authorities, duties, responsibilities, and status
(including offices, titles, and reporting requirements) as an officer
of the Company, or a reduction or alteration in the nature or status
of the Executive's authorities, duties, or responsibilities from those
in effect during the immediately preceding fiscal year, other than an
insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(b)Without the Executive's consent, the Company's requiring the Executive
to be based at a location which is at least fifty (50) miles further
from the Executive's primary residence as of the Effective Date than
is such residence from the Company's current headquarters, except for
required travel on the Company's business to an extent substantially
consistent with the Executive's business obligations as of the
Effective Date;
(c) A failure by the Company to meet any obligation under Article 4 herein,
except as provided in Section 4.7 herein.
(d) The failure of the Company to obtain a satisfactory agreement from any
successor to the Company to assume and agree to perform this
Agreement, as contemplated in Section 11.1 herein.
Upon a termination of the Executive's employment for Good Reason at any
time other than during the Change-in-Control Period, the Executive shall be
entitled to receive the same payments and benefits as he is entitled to
receive following an involuntary termination of his employment by the Company
without Cause, as specified in Section 6.4 herein. The payment of Base Salary
and pro rata Bonus shall be made to the Executive within thirty (30) calendar
days following the effective date of employment termination. Upon a
termination for Good Reason within the Change-in-Control Period, the Executive
shall be entitled to receive the payments and benefits set forth in Article 7
herein in lieu of those set forth in this Section 6.6.
The Executive's right to terminate employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good Reason herein.
6.7 Nonrenewal by Company. Upon any termination of this Agreement as a
result of a notice of nonrenewal by the Company pursuant to Article 1 hereof,
upon the effective date of such termination, the Company shall pay to the
Executive a lump-sum cash payment equal to twelve (12) full months' Base
Salary then in effect and shall continue the Executive's health and welfare
benefits for twelve (12) full months at the employee rates then in effect. If
for any reason the Company is unable to continue health and welfare benefits
as required by the preceding sentence, the Company shall either provide
equivalent benefits to the Executive or pay to the Executive a lump-sum cash
payment equal to the value of the benefits which the Company is unable to
provide. Continuation of health benefits under this Section 6.7 will count
against, and will not extend, the period during which benefits are required to
be continued under COBRA. In addition, the Company shall pay the Executive's
Bonus for the final year within sixty (60) days after the effective date of
the termination of this Agreement.
Article 7. Change-in-Control
7.1 Employment Terminations in Connection With a Change-in-Control. In the
event of a Qualifying Termination (as defined below) during a Change- in-
Control Period, the Company shall pay to the Executive and provide him with
benefits in lieu of the benefits which otherwise would have been payable under
this Agreement such that the total benefits payable to the Executive shall be
as follows:
(a)A lump-sum amount equal to three (3) times the highest rate of the
Executive's annualized Base Salary rate in effect at any time up to
and including the effective date of termination;
(b)A lump-sum amount equal to three (3) times the higher of the Executive's
Bonus for the last fiscal year prior to the Change-in-Control or the
average annual Bonus paid to the Executive for the last three (3)
fiscal years prior to the Change-in-Control;
(c)An amount equal to the Executive's unpaid Base Salary and pro rata Bonus
through the effective date of termination, determined as provided in
Section 6.4 herein; and
(d)A continuation of health and welfare benefits for three (3) full years
from the effective date of termination. If for any reason the Company
is unable to continue health and welfare benefits as required by the
preceding sentence, the Company shall either provide equivalent
benefits to the Executive or pay to the Executive a lump-sum cash
payment equal to the value of the benefits which the Company is unable
to provide. Continuation of health benefits under this Section 7.1
will count against, and will not extend, the period during which
benefits are required to be continued under COBRA. The continuation of
these welfare benefits may be discontinued by the Company prior to the
end of the three- (3-) year period in the event the Executive has
available substantially similar benefits from a subsequent employer,
as determined by the Company's Board of Directors.
For purposes of this Article 7, a Qualifying Termination shall mean any
termination of the Executive's employment or this Agreement, other than a
termination: (1) by the Company for Cause; (2) by reason of death, Disability,
or Retirement; or (3) by the Executive without Good Reason. Payment of any
lump-sum amounts pursuant to this Section
7.1 will be made within sixty (60) days after the effective date of the
termination of the Executive's employment or this Agreement.
Notwithstanding any other provisions of this Agreement, in the event that
the Company delivers a written notice of intent not to renew to the Executive
at a time when the Company is aware of a Change-in-Control (or is aware of a
proposed transaction which could reasonably be expected to result in a Change-
in-Control) or a notice of intent not to renew becomes effective during a
Change-in-Control Period but prior to the effective date of a Change-in-
Control, the nonrenewal of this Agreement shall be deemed to be an involuntary
termination of the Executive's employment without Cause occurring during a
Change of Control Period (and in such event, the Executive shall be entitled
to receive the payments and benefits set forth in Section 7.1 herein in lieu
of the payments and benefits set forth in Section 6.4 herein).
Notwithstanding any other provision of this Agreement, in the event that
the Company delivers a notice of nonrenewal at any time other than as provided
in the immediately preceding paragraph, the Executive shall not be entitled to
receive the payments and benefits set forth in Section 7.1 herein (but shall
remain entitled to receive the payments and benefits set forth in Section 6.4
herein). Further, a notice of nonrenewal delivered by the Executive to the
Company shall never result in the Executive's ability to receive the payments
and benefits set forth in Section 7.1 herein.
7.2 Definition of "Change-in-Control." A Change-in-Control of the Company
shall be deemed to have occurred as of the first day any one or more of the
following conditions shall have been satisfied:
(a)Any Person (as defined in Section 3(a)(9) of the Securities Exchange Act
of 1934) (other than those Persons in control of the Company as of the
Effective Date, and other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), becomes the Beneficial Owner (as defined in
Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934), directly or indirectly, of securities of the
Company representing over thirty percent (30%) of the combined voting
power of the Company's common stock then outstanding; or
(b)During any period of two (2) consecutive years (not including any period
prior to the Effective Date), individuals who at the beginning of such
period constitute the Board of Directors (and any new Director, whose
election was approved or recommended by a vote of at least two-thirds
(2/3) 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 so
approved), cease for any reason to constitute a majority thereof; or
(c)The stockholders of the Company approve: (i) a plan of complete
liquidation of the Company; or (ii) an agreement for the sale or
disposition of all or substantially all the Company's assets (except
as provided in (iii)); or (iii) a merger, consolidation, share
exchange, or reorganization of the Company with or involving any other
corporation, other than a merger, consolidation, share exchange, or
reorganization that would result in the owners of common stock having
more than fifty percent (50%) of the combined voting power of the
common stock of the Company outstanding immediately prior thereto,
continuing to have (either by such stock remaining outstanding or by
being converted into common stock of another entity or entities), more
than fifty percent (50%) of the combined voting power of the common
stock which is outstanding immediately after such merger,
consolidation, share exchange, or reorganization.
However, in no event shall a Change-in-Control be deemed to have occurred,
with respect to the Executive, if the Executive is part of a purchasing group
which consummates the Change-in-Control transaction. The Executive shall be
deemed "part of a purchasing group" for purposes of the preceding sentence if
the Executive is an equity participant in the purchasing company or group
(except for: (i) passive ownership of less than two percent (2%) of the stock
of the purchasing company; or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not significant, as determined
prior to the Change-in-Control by a majority of the nonemployee continuing
Directors).
7.3 Change-in-Control Period. "Change-in-Control Period" shall mean the
period of time commencing with the date on which the Company becomes aware of
the Change-in-Control or becomes aware of a proposed transaction which
reasonably could be expected to result in a Change-in-Control, and ending on
the first to occur of: (a) two (2) years after the effective date of the
Change-in-Control; or (b) the date on which the proposed transaction no longer
is reasonably expected to occur.
7.4 Limitation on Change-in-Control Benefits. In the event that any of the
amounts payable to the Executive by the Company pursuant to the provisions of
Section 7.1 of this Agreement or otherwise would, if made, be nondeductible
for Federal income tax purposes under Section 280G of the Internal Revenue
Code of 1986, as amended (after application of Section 280G(b)(4)), the amount
payable by the Company shall be reduced by the minimum amount necessary to
cause the Executive to receive no payments which would be nondeductible by the
Company for Federal income tax purposes under Section 280G of the Code. For
purposes of determining whether or not payments under Section 7.1 or otherwise
would in fact be nondeductible to the Company under Code Section 280G, the
following principles and guidelines are agreed to, and, absent contrary mutual
agreement, shall be followed: (i) all payments under or in respect of
supplemental retirement plans, and stock option, bonus, and other incentive
compensation plans are intended to represent reasonable compensation for
personal services performed by the Executive through the date of termination
of the Executive's employment; (ii) if there is an issue as to whether any
payments being made to the Executive constitute "parachute payments" under
Section 280G of the Code, and the Company and the Executive cannot agree upon
the amount thereof within thirty (30) days after the effective date of the
termination of the Executive's employment, the Executive and the Company
shall, within forty-five (45) days after the effective date of the termination
of Executive's employment, mutually agree upon and appoint a third party
arbitrator who shall analyze the issue giving recognition to the foregoing
intentions and shall issue a report within thirty (30) days of the appointment
stating the arbitrator's best estimate of the amount of "parachute payments"
under Code Section 280G, if any, and the report of such arbitrator shall be
conclusive and binding on the parties; (iii) the third party arbitrator
selected shall be a nationally recognized accounting firm or a management
consulting firm specializing in the area of executive compensation, who shall
be entitled to engage independent legal counsel for advice with respect to
legal matters in connection with the report; (iv) if the parties cannot agree
upon a third party arbitrator within the specified forty five- (45-) day time
period, an arbitrator shall be selected and appointed by the Chief Judge of
the United States District Court for the District of Maryland; and (v) the
costs and expenses of the arbitrator, including counsel's fees, shall be borne
by the Company. The Executive and the Company agree that each will in all
cases file tax returns on a basis consistent with any conclusions reached with
respect to the deductibility of amounts under Code Section 280G, and will
defend such position to the extent practicable in the event a contrary
position is taken by the Internal Revenue Service. The Executive shall be
entitled to reimbursement of counsel fees in connection with any such defense
as provided in Section 12.1 hereof.
In the event of any reduction of payments made or to be made to the
Executive pursuant to Section 7.1 or otherwise as a result of this Section
7.4, the Executive shall be entitled to select the amount and form of
compensation to be reduced or eliminated.
7.5 Subsequent Imposition of Excise Tax. If, notwithstanding compliance
with the provisions of Section 7.4 herein, it is ultimately determined by a
court or pursuant to a final determination by the Internal Revenue Service
that any portion of the payments to the Executive is considered to be an
"excess parachute payment," subject to the excise tax under Section 4999 of
the Code, which was not contemplated to be an "excess parachute payment" at
the time of payment (so as to accurately determine whether a limitation should
have been applied to the payments to maximize the net benefit to the
Executive, as provided in Section 7.4 hereof), the Executive shall be entitled
to receive a lump-sum cash payment sufficient to place the Executive in the
same net after-tax position, computed by using the "Special Tax Rate" as such
term is defined below, that the Executive
would have been in had such payment not been subject to such excise tax, and
had the Executive not incurred any interest charges or penalties with respect
to the imposition of such excise tax. For purposes of this Agreement, the
"Special Tax Rate" shall be the highest effective Federal and state marginal
tax rates applicable to the Executive in the year in which the payment
contemplated under this Section 7.5 is made.
Article 8. Outplacement Assistance
Following a Qualifying Termination (as defined in Section 7.1 herein) the
Executive shall be reimbursed by the Company for the costs of all outplacement
services obtained by the Executive within the two (2) year period after the
effective date of termination; provided, however, that the total reimbursement
shall be limited to an amount equal to fifteen percent (15%) of the
Executive's Base Salary as of the effective date of termination.
Article 9. Noncompetition
9.1 Prohibition on Competition. Without the prior written consent of the
Company: (a) during the term of this Agreement; (b) for twenty-four (24)
months following the termination of this Agreement for Cause or expiration or
termination of this Agreement as a result of Notice of Nonrenewal by the
Executive pursuant to Article 1; and (c) for twenty-four (24) months following
the effective date of a termination of this Agreement by the Executive
pursuant to Section 6.3, the Executive shall not serve as an employee or
officer of any business or enterprise which is both: (1) engaged in the
domestic homebuilding business; and (2) is ranked in the top ten, based on
annual revenues, of all domestic homebuilders.
However, the Executive shall be allowed to purchase and hold for investment
less than three percent (3%) of the shares of any corporation whose shares are
regularly traded on a national securities exchange or in the over-the-counter
market.
9.2 Disclosure of Information. The Executive recognizes that he has access
to and knowledge of certain confidential and proprietary information of the
Company which is essential to the performance of his duties under this
Agreement. The Executive will not, during or after the term of his employment
by the Company, in whole or in part, disclose such information to any person,
firm, corporation, association, or other entity for any reason or purpose
whatsoever, nor shall he make use of any such information for his own
purposes.
9.3 Covenants Regarding Other Employees. During the term of this Agreement,
and for a period of twenty-four (24) months following the expiration of this
Agreement, the Executive agrees not to attempt to induce any employee of the
Company to terminate his or her employment with the Company, accept employment
with any competitor of the Company, or to interfere in a similar manner with
the business of the Company.
9.4 Specific Performance. The parties recognize that the Company
will have no adequate remedy at law for breach by the Executive of the
requirements of this Article 9 and, in the event of such breach, the Company
and the Executive hereby agree that, in addition to the right to seek monetary
damages, the Company will be entitled to a decree of specific performance,
mandamus, or other appropriate remedy to enforce performance of such
requirements.
Article 10. Indemnification
The Company hereby covenants and agrees to indemnify and hold harmless the
Executive fully, completely, and absolutely against and in respect to any and
all actions, suits, proceedings, claims, demands, judgments, costs, expenses
(including attorney's fees), losses, and damages resulting from the
Executive's good faith performance of his duties and obligations under the
terms of this Agreement. Nothing herein shall limit or reduce any rights of
indemnification to which the Executive might be entitled under the charter or
by-laws of the Company or otherwise.
Article 11. Assignment
11.1 Assignment by Company. This Agreement may and shall be assigned or
transferred to, and shall be binding upon and shall inure to the benefit of,
any successor of the Company, and any such successor shall be deemed
substituted for all purposes of the "Company" under the terms of this
Agreement. As used in this Agreement, the term "successor" shall mean any
person, firm, corporation, or business entity which at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all of the
assets or the business of the Company. Notwithstanding such assignment, the
Company shall remain, with such successor, jointly and severally liable for
all its obligations hereunder.
Failure of the Company to obtain the agreement of any successor to be bound
by the terms of this Agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement, and shall immediately entitle
the Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled in the event of a Qualifying
Termination during a Change-in-Control Period, as provided in Article 7
hereof.
Except as herein provided, this Agreement may not otherwise be assigned by
the Company.
11.2 Assignment by Executive. The services to be provided by the Executive
to the Company hereunder are personal to the Executive, and the Executive's
duties may not be assigned by the Executive; provided, however that this
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, and administrators, successors,
heirs, distributees, devisees, and legatees. If the Executive dies while any
amounts payable to the Executive hereunder remain outstanding, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, in the absence of such designee, to the
Executive's estate.
Article 12. Dispute Resolution and Notice
12.1 Dispute Resolution. The Executive shall have the right and option to
elect to have any good faith dispute or controversy arising under or in
connection with this Agreement settled by litigation or by arbitration.
If arbitration is selected, such proceeding shall be conducted before a
panel of three (3) arbitrators sitting in a location selected by the Executive
within fifty (50) miles from the location of his principal place of
employment, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the award of the
arbitrators in any court having competent jurisdiction.
All expenses of such litigation or arbitration, including the reasonable
fees and expenses of the legal representative for the Executive, and necessary
costs and disbursements incurred as a result of such dispute or legal
proceeding, and any prejudgment interest, shall be borne by the Company.
12.2 Notice. Any notices, requests, demands, or other communications
provided for by this Agreement shall be sufficient if in writing and if sent
by registered or certified mail to the Executive at the last address he has
filed in writing with the Company or, in the case of the Company, at its
principal offices.
Article 13. Miscellaneous
13.1 Entire Agreement. This Agreement supersedes any prior agreements or
understandings, oral or written, between the parties hereto, or between the
Executive and the Company, with respect to the subject matter hereof, and
constitutes the entire agreement of the parties with respect thereto.
13.2 Modification. This Agreement shall not be varied, altered, modified,
canceled, changed, or in any way amended except by mutual agreement of the
parties in a written instrument executed by the parties hereto or their legal
representatives.
13.3 Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
13.4 Counterparts. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.
13.5 Tax Withholding. The Company may withhold from any benefits payable
under this Agreement all Federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
13.6 Beneficiaries. The Executive may designate one or more persons or
entities as the primary and/or contingent beneficiaries of any amounts to be
received under this Agreement. Such designation must be in the form of a
signed writing acceptable to the Board or the Board's designee. The Executive
may make or change such designation at any time.
Article 14. Governing Law
To the extent not preempted by Federal law, the provisions of this
Agreement shall be construed and enforced in accordance with the laws of the
state of Maryland.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement, as of September 18, 1995.
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The ▇▇▇▇▇▇ Group, Inc. Executive:
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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R. ▇▇▇▇ ▇▇▇▇▇▇, President ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and CEO
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇
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