EMPLOYMENT AND CONSULTING AGREEMENT
Exhibit
10.1
THIS
EMPLOYMENT AND CONSULTING AGREEMENT (the "Agreement") is entered into as of
April 20, 2006, by and between Interstate General Properties Limited
Partnership, S.E. (the "Company"), IGP Group, Corp. (“IGP”), American Community
Properties Trust (“ACPT”) and Xxxxxx X. Xxxxxxxxx (“Xxxxxxxxx").
WHEREAS,
the Company is a wholly-owned subsidiary of ACPT and provides management and
other services to ACPT; and
WHEREAS,
IGP is the Company’s general partner; and
WHEREAS,
Xxxxxxxxx, the Company, IGP, and ACPT wish to enter into an agreement in
accordance with the terms and subject to the consideration provided
herein;
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree to be bound by the following terms and conditions:
1. EMPLOYMENT
| 1.1 |
Employment.
The Company shall employ Xxxxxxxxx on the terms and conditions set
forth
herein commencing on January 1, 2006 and continuing until the close
of
business of June 30, 2007 (the “Term”), at which point Xxxxxxxxx’x
employment with the Company will end. At its option, the Company
may
extend Xxxxxxxxx’ employment beyond the Term by giving written notice to
Xxxxxxxxx of such extension. Xxxxxxxxx represents and warrants that
neither the execution by him of this Agreement nor the performance
by him
of his duties and obligations hereunder will violate any agreement
to
which he is a party or by which he is
bound.
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| 1.2 |
Position
and Duties.
Xxxxxxxxx shall serve as President of IGP, and shall have primary
responsibility for administration of the Company’s business interests in
Puerto Rico including, but not limited to, acquiring and selling
real
estate, leasing properties, land development, residential and commercial
construction projects and providing management services for apartments.
In
addition, the ACPT’s Board of Directors or ACPT’s President may, from time
to time, change Xxxxxxxxx' duties and responsibilities as it deems
necessary to further advance the Company’s and ACPT's business interests
and objectives. Xxxxxxxxx shall report to the President of ACPT.
During
the Term, Xxxxxxxxx shall devote all of his working time and efforts
to
the business and affairs of ACPT and its
subsidiaries.
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| 1.3 |
Place
of Performance.
In connection with his employment by the Company, Xxxxxxxxx shall
be based
at the Company's executive offices in Puerto Rico, which, as of the
date
of this Agreement, are located at Parque Escorial, Municipality of
Carolina.
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| 1.4 |
Compensation.
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| (a) |
Base
Salary.
Xxxxxxxxx shall receive an annual base salary of $300,000.00, payable
in
substantially equal semi-monthly installments (the "Base Salary").
Xxxxxxxxx may receive salary increases at the discretion of the Board.
For
employment periods of less than a full year, the Base Salary shall
be
pro-rated for the time employed.
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| (b) |
Bonus
and Benefit
Plans.
Xxxxxxxxx shall participate in such bonuses and benefit plans as
may be
established from time to time by the Company on the same basis as
comparable senior executive employees of the Company. The granting
to
Xxxxxxxxx of any discretionary benefits under such plans shall be
determined solely by the Board.
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| (c) |
Expenses.
During the term of his employment hereunder, Xxxxxxxxx shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred
by
him (in accordance with the policies and procedures established for
the
Company's senior executive employees) in connection with his services
hereunder. Xxxxxxxxx shall account to the Company for such expenses
in
accordance with established Company
policy.
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| (d) |
Vacations.
Xxxxxxxxx shall be entitled to the number of paid vacation days determined
by the Company generally for its senior executive employees, but
not less
than twenty (20) days per year. Xxxxxxxxx shall also be entitled
to all
paid holidays given to the Company's senior executive
employees.
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| (e) |
Certain
Specified Benefits.
In addition to the benefits for which Xxxxxxxxx is eligible under
subsection (b) of this section, during the term of his employment
hereunder, the Company shall provide for Xxxxxxxxx'x business use
a
suitable automobile, as determined by the Company in its sole discretion,
and shall pay Xxxxxxxxx'x membership dues in the Rio Mar Country
Club.
Xxxxxxxxx shall have the option to purchase the automobile at the
time his
employment is terminated.
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| (f) |
Withholding.
Anything in this Agreement to the contrary notwithstanding, all payments
required to be made by the Company hereunder to Xxxxxxxxx or his
estate or
beneficiaries shall be subject to the withholding of such amounts
relating
to taxes as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation. In lieu of withholding
such
amounts, in whole or in part, the Company may, in its sole discretion,
accept other provisions for payment of taxes and withholdings as
required
by law, provided the Company is satisfied that all requirements of
law
affecting its responsibilities to withhold compensation have been
satisfied.
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2. CONSULTING
| 2.1 |
Consulting
Agreement.
Upon the termination of the Term, ACPT shall engage Xxxxxxxxx as
a
consultant on the terms and conditions set forth herein commencing
on July
1, 2007 and continuing until the close of business June 30, 2010
(“the
Consulting Period”) at which point Xxxxxxxxx’x consulting contract (the
“Consulting Agreement”) with ACPT will end unless further extended in
writing by mutual agreement of the
parties.
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| 2.2 |
Consultant
Services.
Xxxxxxxxx shall provide consultant services to the Company on an
as-needed
basis. Such services will be provided within a reasonable time period
after a request by the Company. The services may include, but are
not
limited to, advice on purchasing and selling assets, providing information
and testimony in any lawsuits brought against the Company relating
to
issues which arose during Xxxxxxxxx’ employment, and assistance in
obtaining loans and permits for on-going construction
projects.
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| (a) |
Xxxxxxxxx
will be paid an annual fee of $ 100,000.00, payable in substantially
equal
semi-monthly installments.
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| (b) |
ACPT
will reimburse Xxxxxxxxx for medical insurance for the first 18 months
he
engages in consulting services for ACPT in an amount equal to Xxxxxxxxx’
COBRA payments to the Company, the Company’s health insurance plan or a
replacement plan that Xxxxxxxxx obtains, whichever is
less.
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| (c) |
The
total number of hours for consultant services for any one twelve
month
period shall not exceed 250 hours.
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| (d) |
Out-of-pocket
expenses for travel, lodging and meals will be reimbursed by the
Company
as long as Xxxxxxxxx obtains ACPT’s authorization to travel prior to
traveling on behalf of ACPT.
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(e)
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ACPT
will reimburse Xxxxxxxxx up to a maximum of $10,000 for moving expenses
he
incurs in his moving from Puerto Rico to his chosen new destination,
provided that Xxxxxxxxx provides receipts of costs expended to
ACPT.
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3. GENERAL
PROVISIONS
| 3.1 |
Unauthorized
Disclosure.
Xxxxxxxxx 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 ACPT,
the
Company and/or their Affiliates, or to a person to whom disclosure
is
necessary or appropriate in connection with the performance by Xxxxxxxxx
of his duties as an executive of the Company or consultant to ACPT
(e.g.,
disclosure to the Company's or its Affiliates' outside accountants
or
bankers of financial data properly requested by such persons and
approved
by an authorized officer of the Company), any confidential information
obtained by him while working or consulting for the Company or their
ACPT
Affiliates with respect to any of their 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 Xxxxxxxxx) 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 the Company. Xxxxxxxxx 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 Xxxxxxxxx
(i)
discloses to his attorney the provisions of this Section (3.1) and
(ii)
agrees not to waive the attorney-client privilege with respect thereto.
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| 3.2 |
Corporate
Opportunities.
While Xxxxxxxxx is employed by the Company or consulting for ACPT
hereunder, Xxxxxxxxx shall use his best efforts to make available
to the
Company and ACPT business opportunities that come to his
attention.
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| 3.3 |
Termination.
|
| (a) |
Either
party may terminate this Agreement for any reason upon 90 days prior
written notice to the other. Except as otherwise provided in this
Section
3.3, upon such termination, the salary payment and benefit obligations
of
the Company hereunder shall cease.
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| (b) |
This
Agreement shall automatically terminate upon the death or disability
of
Xxxxxxxxx. For purposes of this Agreement, Xxxxxxxxx shall become
"disabled" at such time as Xxxxxxxxx has a physical or mental condition,
verified by a licensed physician designated by the Company or ACPT,
which
in the good faith judgment of the Board or ACPT prevents Xxxxxxxxx
from
carrying out one or more of the material aspects of his assigned
duties
for at least 270 consecutive days. Xxxxxxxxx agrees, upon request
of the
Board, at a time convenient to Xxxxxxxxx during a 30-day period designated
by the Board, to submit to any medically reasonable examination by
a
physician designated by the Company or ACPT. In the event of termination
under this Section 3.3(b), (i) the Company shall pay to Xxxxxxxxx,
or
Xxxxxxxxx' estate, as the case may be, a pro-rated portion of the
Base
Salary or consulting pay for a period of six months following such
termination and (ii) Xxxxxxxxx shall remain eligible to receive all
benefits pursuant to Section 1.4(b) hereof during such six month
period if
Xxxxxxxxx is still employed by the Company on the date of
disability.
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| (c) |
The
Company or ACPT may terminate this Agreement immediately for cause.
For
purposes of this Agreement, "cause" shall mean any termination of
Xxxxxxxxx by the Company or ACPT approved by the Board arising from
(i)
Xxxxxxxxx' willful, reckless or grossly negligent inattention to
his
duties and responsibilities to the Company hereunder or to ACPT under
the
Consulting Agreement, (ii) Xxxxxxxxx'x unethical conduct relating to
the performance of his duties and responsibilities, (iii)
Xxxxxxxxx'x repeated disregard of the Company's or ACPT’s written
rules, policies and regulations, (iv) conviction of any felony or
conviction of a criminal offense relating to fraud or theft or
(v) repeated failure of Xxxxxxxxx to satisfactorily perform under
this Agreement or under the Consulting Agreement, as the case may
be, (vi)
any breach by Xxxxxxxxx of any of his obligations under this Agreement
or
under the Consulting Agreement, as the case may be, including but
not
limited to a breach of Xxxxxxxxx’ obligations under paragraph “3.4
Non-Competition”. In the event of termination under this Section 3.3(c),
all salary payment and benefit obligations of ACPT and the Company
hereunder shall cease immediately.
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| (d) |
In
the event of a termination of this Agreement by the Company for any
reason
other than for cause (as said term has been defined in subparagraph
(c)
above) prior to June 30, 2007, the Company shall pay to Xxxxxxxxx
the Base
Salary for the period remaining in the agreement plus the Base Salary
for
one additional year. The provisions for consultant services under
Section
2, including any fees, will be
terminated.
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| (e) |
Xxxxxxxxx
may terminate this Agreement immediately upon any breach by the Company
of
any of its obligations under this Agreement. In the event of (i)
a
termination by Xxxxxxxxx under this Section 3.3(e), the Company shall
pay
to Xxxxxxxxx the Base Salary for the period remaining in the Agreement
plus the Base Salary for one additional year, or if the breach occurs
during the Consulting Period, then the Company shall pay Xxxxxxxxx
all
monies due for the remainder of the Consulting
Period.
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| 3.4 |
Non-Competition.
Xxxxxxxxx shall not, during the Non-Compete Period, either directly
or
indirectly, individually or in partnership, carry on or be engaged
in, or
concerned with or interested in, in any capacity whatsoever (including
that of principal, agent, shareholder, consultant, employee, lender
or
surety), any person, firm, association, syndicate or company engaged
acquiring and selling real estate, leasing properties, land development,
residential and commercial construction projects and providing management
services for apartments anywhere in Puerto Rico, except on behalf
of the
Company or its affiliates. Xxxxxxxxx, agrees that during the Non-Compete
Period, the Executive shall not directly or indirectly without the
prior
written consent of the Company or ACPT, (i) hire or attempt to hire
any person who is or was at any time during the one year period preceding
the date on which Xxxxxxxxx’x employment terminates, an officer, director
or employee of ACPT, the Company or ACPT’s affiliates, or (ii) assist in
hiring any person or solicit for the purpose of hiring or otherwise
induce or encourage any such officer, director or employee to terminate
his relationship with ACPT, the Company or their affiliates. The
ownership
or acquisition by Xxxxxxxxx as a passive investor of an aggregate
of less
than 5% of the outstanding stock of any publicly traded company shall
not,
considered alone, constitute a violation of this Section
3.4.
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| 3.5 |
Enforcement
of Covenants.
Xxxxxxxxx acknowledges that he has carefully read and considered
all the
terms and conditions of this Agreement and consulted with counsel
of his
choice regarding this Agreement, including without limitation the
restraints imposed upon him pursuant to Section 3. Xxxxxxxxx agrees
that
said restraints are necessary for the reasonable and proper protection
of
ACPT, the Company and ACPT’s Affiliates. Xxxxxxxxx further acknowledges
that, were he to breach any of the covenants or agreements contained
in
Section 3 hereof, the damage to ACPT, the Company, and ACPT Affiliates
could be irreparable. The Executive therefore agrees that the Company,
in
addition to any other remedies available to it, shall be entitled
to
preliminary and permanent injunctive relief against any breach or
threatened breach by Xxxxxxxxx of any of said covenants or agreements.
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| 3.6 |
Non-Compete
Period.
"Non-Compete Period" means the period beginning on January 1, 2006
and
ending at the end of the “Consulting Period.” In the event of any breach
of the Agreement by the Company, however, the “Non-Compete Period” shall
terminate immediately provided that the Consulting Agreement is also
terminated.
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| 3.7 |
Notices.
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed
to
have been duly given when delivered by hand or facsimile transmission
or
five days after mailing by United States registered or certified
mail,
return receipt requested, postage prepaid, addressed as
follows:
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If
to the
Company:
American
Rental Management Company
000
Xxxxxxxxx Xxxxxxx Xxxxxx
Xx.
Xxxxxxx, Xxxxxxxx 00000
Attn:
Xxxxx X. Xxxxx
If
to
Xxxxxxxxx:
Xx.
Xxxxxx X. Xxxxxxxxx (to be notified to the Company as soon as determined)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.
| 3.8 |
Entire
Agreement.
This Agreement constitutes the entire agreement between the parties
hereto
with respect to the transactions contemplated herein, and supersedes
all
prior oral or written agreements, commitments or understandings with
respect to the matters provided for herein. This Agreement shall
be
binding upon, and shall inure to the benefit of, the respective
successors, heirs, and permitted assigns of the parties; provided
that
Xxxxxxxxx may not assign this Agreement without the prior written
consent
of the Company.
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| 3.9 |
Headings.
Article and section headings contained in this Agreement are inserted
for
convenience of reference only, shall not be deemed to be a part of
this
Agreement for any purpose, and shall not in any way define or affect
the
meaning, construction or scope of any of the provisions
hereof.
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| 3.10 |
Validity.
The invalidity or unenforceability of any provision or provisions
of this
Agreement shall not affect the validity or enforceability of any
other
provision of this Agreement, which shall remain in full force and
effect.
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| 3.11 |
Governing
Law.
This Agreement, the rights and obligations of the parties hereto,
and any
claims or disputes relating thereto, shall be governed by and construed
in
accordance with the laws of the State of Maryland (excluding the
choice-of-law rules thereof).
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| 3.12 |
Miscellaneous.
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by Xxxxxxxxx and the Company and/or
ACPT.
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| 3.13 |
Counterparts.
This Agreement may be executed in two or more counterparts, each
of which
shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the date and year
first above written.
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By:
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/s/
Xxxxxxx X. Xxxxxxx
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Name:
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Xxxxxxx
X. Xxxxxxx
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Title:
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Chief
Financial Officer
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EXECUTIVE
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By:
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/s/
Xxxxxx X. Xxxxxxxxx
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Name
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XXXXXX
X. XXXXXXXXX
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By:
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/s/
Xxxxx X. Xxxxx
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Name:
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Xxxxx
X. Xxxxx
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Title:
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President
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IGP
GROUP CORP. , by itself and as general partner of INTERSTATE GENERAL
PROPERTIES LIMITED PARTNERSHIP, S.E.
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By:
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/s/
Xxxxx X. Xxxxx
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Name:
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Xxxxx
X. Xxxxx
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Title:
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Chief
Executive Officer
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