EXHIBIT 10.4
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made and entered into this
___ day of _________ 1998, by and between American Rental Management Company, a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxx (the "Consultant").
RECITALS
WHEREAS, the Company is a wholly-owned subsidiary of American
Community Properties Trust ("ACPT") and provides management and other services
to ACPT;
WHEREAS, Interstate General Company L.P. ("IGC") has transferred its
principal real estate assets and operations to ACPT (the "Transferred Business")
and distributed all of the common shares of beneficial interest of ACPT to its
partners;
WHEREAS, the Consultant has be the chief executive officer of IGC for
over 30 years and therefore possesses unique and valuable experience and
expertise relating to the Transferred Business;
WHEREAS, in order to provide continuity of management and to take
advantage of the Consultant's expertise, ACPT, through the Company, wishes to
secure the services of the Consultant, and the Consultant wishes to provide such
services, in accordance with the terms and subject to the conditions provided
herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree to be bound by the following terms and conditions:
I. POSITION
The Company hereby engages the Consultant, and the Consultant hereby
agrees, to serve as principal business consultant to ACPT and the Company, and
shall be available to provide consulting services as requested from time to time
by the Board of Trustees of ACPT (the "Board"). The Consultant shall report
directly to the Board and shall render such services to ACPT as are customarily
rendered by a consultant, including, but not limited to, advising ACPT on
general business strategies, strategic opportunities, and other matters related
to the business of ACPT and its affiliates.
II. TERM
The term of this Agreement (the "Term") shall commence on the date
hereof, and shall continue thereafter, unless sooner terminated as provided
herein, until the tenth anniversary hereof (the "Expiration Date"). The
Consultant's engagement may terminate prior to the Expiration Date if one or
more of the following circumstances occur:
A. If the Consultant dies, the Consultant's engagement and this
Agreement shall terminate automatically upon such date of death and the Company
shall have no further obligations hereunder, subject to Section IV.B.
B. In the event that the Consultant becomes Disabled during the
Term, the Company at its option may terminate Consultant's engagement and this
Agreement, in which case the Company shall have no further obligations
hereunder. For purposes of this Agreement, the Consultant shall become
"Disabled" at such time as the Consultant has a physical or mental condition,
verified by a physician designated by the Company, which in the
judgment of the Board prevents the Consultant from carrying out one or more of
the material aspects of his assigned duties for at least 270 consecutive days.
The Consultant agrees, upon request of the Board, at a time convenient to the
Consultant during a 30-day period designated by the Board, to submit to any
medically reasonable examination by a physician designated by the Company.
C. The Company may, at its election, terminate the Consultant's
engagement and this Agreement for cause. For purposes hereof, "cause" shall be
defined as (1) engaging in fraud or conduct with the intent of causing
substantial harm to ACPT or the Company; (2) conviction of a felony, other crime
involving theft or fraud, or other crime of moral turpitude involving ACPT or
the Company; (it being understood that "cause" shall not include any conviction
of charges pending against Consultant as of the date of this Agreement) and/or
(3) any material breach of a term of the Agreement. In the event the Company
elects to terminate the Consultant's engagement for cause, such termination may
be made effective immediately, and no advance notice shall be required. The
decision to terminate the Consultant's engagement for cause must be approved by
the Board.
D. Either the Company or the Consultant may elect to terminate this
Agreement without cause. In such a case, advance written notice of termination
shall be delivered by the terminating party to the non-terminating party at
least ninety (90) days prior to the date of termination. In addition, if the
Company terminates the engagement without cause or the Consultant terminates the
engagement for "Good Reason," the Company agrees to pay the Consultant the
remaining fee payments due hereunder for the balance of the Term. The decision
to terminate the Consultant's engagement without cause must be approved by the
Board.
For purposes of this Section II.D., the Consultant shall have
terminated the engagement for a Good Reason if the Consultant terminates the
engagement within six (6) months following the occurrence of (i) the Company
instructing the Consultant despite his written objection delivered to the Board
to take any action which is in violation of any law, ordinance or regulation or
would require any act of dishonesty or moral turpitude; or (ii) the Company
committing a material breach of any of the provisions of this Agreement.
E. In the event that ACPT sells all, or substantially all, of its
assets, this Agreement shall terminate automatically upon the date of such sale,
and neither party shall have any further obligations hereunder, subject to
Section IV.B.
III. DUTIES AND RESPONSIBILITIES
A. During the period of his engagement hereunder, and for a period
of three (3) years thereafter, the Consultant shall not, without the written
consent of the Board or a person authorized by the Board, disclose to any person
other than as required by law or court order, or other than to an authorized
employee of the Company or its affiliates, or to a person to whom disclosure is
necessary or appropriate in connection with the performance by the Consultant of
his duties as an Consultant of ACPT and the Company any confidential information
obtained by him while serving as a consultant to the Company with respect to any
of ACPT's or its affiliates' products, services, customers, suppliers, marketing
techniques, methods or future plans; provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Consultant) or any
information of a type not otherwise considered confidential by persons engaged
in the same business or a business similar to that conducted by ACPT or the
Company. The Consultant shall be allowed to disclose confidential information to
his attorney solely for the purpose of ascertaining whether such information is
confidential within the intent of this Agreement; provided, however, that the
Consultant (a) discloses to his attorney the provisions of this subsection A and
(b) agrees not to waive the attorney-client privilege with respect thereto.
B. Nothing in this Agreement shall be deemed to restrict the
Consultant from pursuing or engaging in other business activities provided that
such activities do not unreasonably interfere with the performance of his
responsibilities hereunder. Without restricting the generality of the
foregoing, the Company recognizes that Consultant will serve in executive
capacities with Interstate General Company L.P. and affiliated entities.
IV. COMPENSATION
A. For the first two (2) years of the Term, the Company shall pay
the Consultant an annual fee of Five Hundred Thousand Dollars (US $500,000).
For all subsequent years that this Agreement remains in force, the Company shall
pay the Consultant an annual fee of Two Hundred Thousand Dollars (US $200,000).
In the event that the Consultant is engaged under this Agreement for any portion
of a year, the Consultant shall be entitled to receive a pro rata amount of the
applicable annual fee. The Consultant's fee shall be paid in semi-monthly
installments on the fifteenth (15th) day and last day of each calendar month or
on such other basis as shall be convenient for the Company.
B. Notwithstanding anything in this Agreement to the contrary, in
the event that this Agreement terminates on account of the death of the
Consultant or the sale of all, or substantially all, of the assets of the
Company, Consultant (or his estate, as the case may be) shall be entitled to
receive the lesser of (i) Four Hundred Thousand Dollars ($400,000), and (ii) the
total aggregate annual fees then payable under this Agreement if the Agreement
were to expire on the Expiration Date.
C. The Company shall promptly reimburse Consultant for the cost of
all expenses reasonably incurred by him in rendering services hereunder.
V. INDEPENDENT CONTRACTOR
Consultant is retained by the Company solely for the purposes set
forth herein. Consultant shall not have the power to bind ACPT or the Company
nor shall he make any such representation. Consultant's relation to Company
shall be that of an independent contractor.
VI. ARBITRATION
A. Any dispute or controversy arising between the Consultant and the
Company relating to this Agreement shall be submitted to private, binding
arbitration, upon the written request of either the Consultant or the Company,
before a panel of three arbitrators, under the administration of and in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), such arbitration to be held in Washington, D.C., or as
otherwise determined by the arbitrators. In the event of such dispute or
controversy, the Company and the Consultant shall independently and
simultaneously select and identify one arbitrator each, both of whom must have
no past or present familial or business relationships with the parties and must
possess expertise in the area of compensation of senior management employees in
the real estate industry. In the event that a party has not selected its
arbitrator within 60 days of initiation of the arbitration, the AAA shall select
such arbitrator. These two arbitrators shall jointly agree upon and select a
third arbitrator who also possesses such credentials. These three arbitrators
shall hear and decide the dispute or controversy by majority vote, and their
decision and award shall be final and conclusive upon the parties, and their
heirs, administrators, executors, successors, and assigns. The arbitrators shall
have no power or authority to add to, subtract from, or otherwise modify the
terms of this Agreement. Wherever the Commercial Arbitration Rules of the AAA
conflict with the procedures set forth in this section, the terms of this
section shall govern. The Consultant and the Company agree that the arbitration
must be initiated by personally delivering a statement of claim to the AAA and
to the party against whom the claim is asserted no later than ninety (90) days
after the basis of the claim becomes known, or reasonably should have been known
or discovered, by the party asserting the claim. In the event arbitration is not
initiated within such ninety (90) day period, such claim, dispute, or
controversy shall be irrevocably time-barred. A judgment based upon such
arbitration award may be entered in any court having jurisdiction thereof.
B. Notwithstanding the foregoing, any action brought by the Company
seeking a temporary restraining order, temporary and/or permanent injunction,
and/or a decree of specific performance of the terms of this Agreement may be
brought in a court of competent jurisdiction without the obligation to proceed
first to arbitration.
VII. ASSIGNABILITY AND BINDING EFFECT
The Consultant may not assign this Agreement, or any obligation or
rights hereunder, to any other person or entity without the express written
consent of the Company. This Agreement shall be binding upon the Consultant and
his heirs, executors, administrators, and successors.
VIII. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Delaware
(excluding the choice-of-law rules thereof).
IX. CAPTIONS
All captions contained in this Agreement are for convenience only and
in no way define or describe the intent of the parties or specific terms hereof.
X. SEVERABILITY
If any provision of this Agreement shall to any extent be held invalid
or unenforceable, the remaining terms and provisions shall not be affected
thereby.
XI. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof. All prior negotiations or stipulations
concerning any matter which preceded or accompanied the execution hereof are
conclusively deemed to be superseded hereby.
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Consultant and such officer or director as may be specifically designated by
the Board.
XII. NOTICES; MISCELLANEOUS
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be duly given when
delivered by hand or facsimile transmission or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company:
American Rental Management Company
[222 Xxxxxxxxx Village Center]
[St. Xxxxxxx, Xxxxxxxx 00000]
Attention: President
If to the Consultant:
Xx. Xxxxx X. Xxxxxx
Dresden Farm
00000 Xxxxxxxxxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.
AMERICAN RENTAL MANAGEMENT COMPANY
Date:
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By: [_____________________]
President
Date:
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Xxxxx X. Xxxxxx
