EXHIBIT 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made this first day of January 2001,
between NVR, INC., a Virginia corporation (the "Company") and XXXX X. XXXXXXX, a
resident of Virginia (the "Executive").
WHEREAS, the parties wish to terminate all prior employment agreements and
amendments thereto; and
WHEREAS, the parties wish to establish the terms of the Executive's future
employment with the Company.
ACCORDINGLY, the parties agree as follows:
1. Employment, Duties and Acceptance.
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1.1 Employment by the Company. The Company hereby employs the Executive,
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for itself and its affiliates, to render exclusive and full-time
services to the Company. The Executive will serve in the capacity of
Senior Vice President -Finance, Chief Financial Officer and Treasurer
of the Company. The Executive will perform such duties as are imposed
on the holder of that office by the By-laws of the Company and such
other duties as are customarily performed by one holding such position
in the same or similar businesses or enterprises as those of the
Company. The Executive will perform such other related duties as may
be assigned to him from time to time by the Company's Board of
Directors. The Executive will devote all his full working time and
attention to the performance of such duties and to the promotion of
the business and interests of the Company. This provision, however,
will not prevent the Executive from investing his funds or
assets in any form or manner, or from acting as a member of the Board
of Directors of any companies, businesses, or charitable
organizations, so long as such investments or companies do not compete
with the Company, subject to the limitations set forth in Section 7.1.
1.2 Acceptance of Employment by the Executive. The Executive accepts such
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employment and shall render the services described above.
1.3 Place of Employment. The Executive's principal place of employment
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shall be the Washington, D.C. metropolitan area, subject to such
reasonable travel as the rendering of services associated with such
position may require.
2. Duration of Employment.
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This Agreement and the employment relationship hereunder will continue
in effect for six (6) years from January 1, 2001 through January 1, 2007. It
may be extended beyond January 1, 2007 by mutual, written agreement at any time.
In the event of the Executive's termination of employment during the term of
this Agreement, the Company will be obligated to pay all base salary, bonus and
other benefits then accrued, as well as cash reimbursement for all accrued but
unused vacation, plus, if applicable, the additional payments provided for in
Sections 6.1, 6.2, 6.4 and 6.6 of this Agreement.
3. Compensation.
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3.1 Base Salary. As compensation for all services rendered pursuant to
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this Agreement, the Company will pay to the Executive an annual base
salary of THREE HUNDRED SIXTY-THREE THOUSAND DOLLARS ($363,000),
payable in equal monthly installments of THIRTY THOUSAND TWO HUNDRED
FIFTY DOLLARS ($30,250). The Company's Board of Directors in its sole
discretion may increase, but may not reduce, the Executive's annual
base salary.
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3.2 Bonuses. The Executive shall be eligible to be paid a bonus annually
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in cash or in the registered stock of NVR, Inc. as determined by the
Compensation Committee of the Board of Directors or in a combination
thereof in a maximum amount of 100% of the Executive's annual base
salary. This bonus shall be paid at the same time (or times) and in
the same manner as other senior executives of the Company. Entitlement
to the bonus is dependent on the Executive meeting certain goals,
which shall be established annually by the Company.
3.3 Participation in Employee Benefit Plans. The Executive shall be
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permitted during the term of this Agreement, if and to the extent
eligible to participate in any group life, hospitalization or
disability insurance plan, health program, pension plan, Employee
Stock Ownership Plan or similar benefit plan of the Company, which may
be available to other comparable executives of the Company generally,
on the same terms as such other executives. The Executive shall be
entitled to paid vacation and all customary holidays each year during
the term of this Agreement in accordance with the Company's policies.
3.4 Expenses. Subject to such policies as may from time to time be
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established by the Company's Board of Directors, the Company shall pay
or reimburse the Executive for all reasonable expenses actually
incurred or paid by the Executive in the performance of the
Executive's services under this Agreement upon presentation of expense
statements or vouchers or such other supporting information as it may
require.
4. Management Long-Term Stock Option Plans.
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The Executive is a participant in the 1993 NVR, Inc. Management Equity
Incentive Plan, 1994 NVR, Inc. Management Equity Incentive Plan, 1996 NVR,
Inc. Management Long-Term Stock Option Plan and the 1998 NVR, Inc.
Management Long-Term Stock Option Plan. The Executive has entered into
separate agreements
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governing the terms of his participation in the Plans.
5. High Performance Compensation Plan.
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The Executive is a participant in the NVR, Inc. High Performance
Compensation Plan. - Number 1 and the NVR, Inc. High Performance
Compensation Plan - Number 2. The Executive has entered into separate
agreements governing the terms of his participation in the Plans.
6. Termination or Disability.
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6.1 Termination Upon Death. If the Executive dies during the term hereof,
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this Agreement shall terminate, except that the Executive's legal
representatives shall be entitled to receive the Executive's base
salary and accrued Bonus for the period ending on the last day of the
second calendar month following the month in which the Executive's
death occurred. Accrued Bonus shall be calculated as one hundred
percent of Base Salary multiplied by the fraction (x) the number of
days in calendar year up to last day of second calendar month
following the month in which Executive died divided by (y) 365 days.
6.2 Disability. If during the term hereof the Executive becomes
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physically or mentally disabled, whether totally or partially, so that
the Executive is, in the discretion of the Company's Board of
Directors, substantially unable to perform his services hereunder, the
Executive shall transfer from active to disability status. Nothing in
this Section 6.2 shall be deemed to in any way affect the Executive's
right to participate in any disability plan maintained by the Company
and for which the Executive is otherwise eligible. If the Executive
transfers to disability status he would be entitled to receive the
Executive's Base Salary and accrued Bonus for the period ending on the
last day of the second calendar month following the month in which the
Executive is transferred to disability status. Accrued Bonus shall be
calculated as one hundred percent of Base Salary multiplied by the
fraction (x) the number of days in calendar
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year up to last day of second calendar month following the month in
which the Executive was transferred to disability status divided by
(y) 365 days.
6.3 Termination for Cause. If the Executive is convicted of any felony,
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other crime involving moral turpitude, or any crime or offense which
results in his incarceration for more than three months, is guilty of
gross misconduct in connection with the performance of his duties as
described in Section 1.1 hereunder, or materially, breaches
affirmative or negative covenants or undertakings set forth in Section
7, the Company at any time by written notice to the Executive, may
terminate the Executive's employment hereunder. Any such termination
shall be for Cause.
6.4 Termination Without Cause. In the event the Company on sixty (60)
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days' notice terminates the Executive's employment without Cause (as
such term is defined in Section 6.3) during the term of this
Agreement, then as full satisfaction of the Company's obligations to
the Executive, the Executive shall be entitled to payment of TWO
HUNDRED PERCENT (200%) of his then annual base salary, paid in twelve
equal monthly installments beginning on the fifteenth day of the first
month following the date of termination. The Executive shall also be
provided with outplacement services with a firm jointly selected by
the Executive and the Company at a cost not to exceed THIRTY THOUSAND
DOLLARS ($30,000).
6.5 Voluntary Termination. The Executive may on sixty (60) days' notice
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terminate his employment hereunder. In such event, he shall not be
entitled to any severance pay except in the circumstances described in
Section 6.6 below.
6.6 Voluntary Termination-Change of Control. In the event the Executive
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voluntarily terminates his employment hereunder in connection with or
within one (1) year after a Change of Control of the Company (as
defined below), the Executive shall receive a payment of TWO HUNDRED
PERCENT (200%) of his then annual
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base salary, as well as his accrued pro-rata bonus (on the assumption
that the maximum annual bonus would have been paid pursuant to Section
3.2) through the date of termination. Payment of such amount shall be
in twelve equal monthly installments beginning on the first day of the
first month following the date of termination. For purposes of this
Agreement, "Change of Control" means (i) any transaction or series of
transactions (including, without limitation, a tender offer, merger or
consolidation) the result of which is that any "person" or "group"
(within the meaning of Section 13 (d) and 14 (d) (2) of the Exchange
Act), becomes the "beneficial owner" (as defined in rule 13d-3 under
the Exchange Act) of more than 50 percent of the total aggregate
voting power of all classes of the voting stock of the Company and/or
warrants or options to acquire such voting stock, calculated on a
fully diluted basis, or (ii) if all or substantially all of the assets
of the Company are sold or otherwise transferred to any individual,
corporation, partnership, trust, association, joint venture, pool,
syndicate or similar organization or group acting in concert or (iii)
the Company is liquidated or dissolved or adopts a plan of liquidation
or (iv) a merger consolidation or other reorganization or business
combinations with any party including a leveraged buy-out or a going
private transaction and where there has been a significant reduction
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in Executive's responsibilities.
6.7 Voluntary Termination-Change in Senior Management Accompanied by
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Change in Business Philosophy. If the Company elects a new Chairman
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and/or Chief Executive Officer (the "New Officer") or provided that
the New Officer enacts major changes in the Company's business
philosophy, mission or business strategies, the Executive may
voluntarily terminate his employment. To provide sufficient time for
a transfer of the Executive's responsibilities and duties, he shall be
required to provide sixty (60) days notice prior to such voluntary
termination and the Company shall have the option of extending the
notice an additional thirty (30) days. In the event the Executive
voluntarily terminates his employment in connection with or within one
year after the election of a New Officer accompanied by any of the
changes described in this Section 6.7, he shall not be
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entitled to any severance pay and shall not be bound by the "Covenant
Not to Compete" described in Section 7.
6.8 Effectiveness. In the event any of the events described in this
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Section 6 should occur during the term of this Agreement, and result
in payments to the Executive which would in their normal course
continue beyond the term of this Agreement, such payments shall be
made at such times and in such amounts as if the term of this
Agreement had not expired.
7. Covenant Not to Compete.
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The covenant set forth in Section 7.1 shall be applicable for a period of
one (1) year after termination in the event the Executive is terminated
pursuant to Section 6.4 "Without Cause" or to Section 6.5 "Voluntary" or to
Section 6.6 "Voluntary Termination -Change of Control". It shall be
applicable for a period of two (2) years after termination in the event the
Executive is terminated pursuant to Section 6.3 for "Cause".
7.1 Scope. During the term of Executive's employment under this
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Agreement, and for the applicable period thereafter, Executive hereby
covenants and agrees that neither he nor any affiliate (as defined
hereinbelow), at any time, directly or indirectly, will (i) engage,
whether as an employee or otherwise, in the Homebuilding and Mortgage
Financing Business (as defined hereinbelow) on behalf of himself or
any other person or entity, whether conducted individually or through
an affiliate; (ii) own, acquire an interest in, manage, operate, join
or control, or participate in the ownership, acquisition, management,
operation or control of, or be a director, agent, representative,
shareholder of more than 1% of the outstanding stock, partner,
employee, officer, or consultant of, any enterprise of any kind that
is engaged in the Homebuilding Business or Mortgage Financing
Business; (iii) induce or attempt to induce any customer or potential
customer of the Company to discontinue, in whole or in part, business,
or not to do business, with the Company or (iv) hire or attempt to
hire any person now or hereafter
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employed by the Company.
7.2 Definitions. For purposes of this Agreement, (i) the term "affiliate"
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shall mean Executive, Executive's spouse, and any minor children
("immediate family") and any entity that Executive and/or any members
of his immediate family control, either directly or indirectly; (ii)
"control" for purposes of the immediately preceding clause shall mean
possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of
voting securities, by contract, or otherwise); and (iii) the term
"Homebuilding Business" and "Mortgage Financing Business" shall mean
the business of designing, constructing, and/or the origination,
underwriting, placement or sale of residential home mortgages at any
location within any Standard Metropolitan Statistical Area (as
determined by the Census Bureau, Department of Commerce, United States
Government) in which is located any office of the Company which has
been assigned to the Executive's area of managerial responsibility at
any time within the last two years of the employment of the Executive
with the Company.
7.3 Reasonableness. The Executive acknowledges that the restrictions
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contained in this Section 7 are reasonable and necessary to protect
the business and interests of the Company, and that it would be
impossible to measure in money the damages that would accrue to the
Company by reason of the Executive's failure to perform his
obligations under this Section 7. Therefore, the Executive hereby
agrees that in addition to any other remedies that the Company may
have at law or at equity with respect to this Section 7, the Company
shall have the right to have all obligations, undertakings,
agreements, and covenants set forth herein specifically performed, and
that the Company shall have the right to obtain an order of such
specific performance (including preliminary and permanent injunctive
relief to prevent a breach or contemplated breach of any provision of
this Section 7) in any court of the United States or any state or
political subdivision thereof, without the necessity of proving actual
damage; provided that the Company is not in breach of any of its
obligations hereunder.
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7.4 No Waiver. No waiver by the Company of a breach of, or of a default
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under, any of the provisions of this Agreement, nor their failure on
one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder shall
thereafter be construed as a waiver of any subsequent breach or
default of a similar nature, or as to the waiver of any such
provision, rights, or privileges hereunder.
7.5 Blue-Pencilling. If any part of any provision of this Section 7
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shall be determined to be invalid or unenforceable under applicable
law, such part shall be ineffective to the extent of such invalidity
or unenforceability only, without in any way affecting the remaining
terms of such provision or the remaining provisions of this Section 7.
The Executive hereby covenants and agrees that to the extent any
provision or portion of this Agreement shall be held, found, or deemed
to be unreasonable, unlawful, or unenforceable, then any necessary
modifications shall be made (but only to such extent) so that such
provision or portion hereof shall be legally enforceable to the
fullest extent permitted by applicable law. The Executive further
agrees and authorizes any court of competent jurisdiction to enforce
any such provision or portion hereof in order that such provision or
portion hereof shall be enforced by such court to the fullest extent
permitted by applicable law.
7.6 Confidentiality. During the term of the Executive's employment with
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the Company, he will acquire information of a proprietary or
confidential nature and knowledge about the operations of the Company.
Accordingly, the Executive agrees not to use or to disclose to any
third party, or cause to be used, in any manner, directly or
indirectly, the information described immediately above. The Executive
further agrees to return to the Company promptly upon the termination
of the Executive's employment with the Company, and all information of
a proprietary or confidential nature acquired by the Executive at any
time during the course of his employment with the Company, to the
extent such information has been reduced to writing, together with any
and all documents and materials of any
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kind then in the possession or control of the Executive which may be
the property of the Company or any affiliate, whether confidential or
otherwise, including any copies which may have been made by or for the
Executive.
7.7 No Conflict. The Covenant Not to Compete set forth in this Section 7
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shall supersede and override any and all limitations on Executive's
right to compete with the Company including, without limitation, any
similar covenants not to compete in the Stock Option Agreements and
the Performance Share Agreements executed in conjunction with the 1993
and 1994 NVR, Inc. Management Equity Incentive Plans, 1996 and 1998
NVR, Inc. Management Long-Term Stock Option Plans and the NVR, Inc.
High Performance Compensation Plans - Number 1 and 2 and shall be the
sole standard by which Executive shall be bound.
8. Other Provisions.
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8.1 Notices. Any notice or other communication required or which may be
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given hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by
certified, registered or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed, telexed, or
sent by facsimile transmission, or if mailed, four days after the date
of mailing as follows:
(i) if the Company, to:
NVR, Inc.
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
(ii) if the Executive, to:
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Xxxx X. Xxxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
8.2 Entire Agreement. This Agreement contains the entire agreement
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between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect
thereto.
8.3. Waiver and Amendments. This Agreement may be amended, modified,
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superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed
by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder.
8.4 Governing Law. This Agreement shall be governed and construed in
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accordance with the laws of the Commonwealth of Virginia.
8.5 Assignability. This Agreement, and the Executive's rights and
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obligations hereunder, may not be assigned by the Executive. The
Company shall assign this Agreement and its rights, together with its
obligations, to any entity which will substantially carry on the
business of the Company subject to the Executive's rights set forth in
this Agreement, but the Company shall even after such assignment be
fully liable to the Executive for all obligations set forth herein.
8.6 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
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8.7 Headings. The headings in this Agreement are for reference purposes
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only and shall not in any way affect the meaning or interpretation of
this Agreement.
8.8 Indemnification. The Company shall indemnify the Executive and hold
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him harmless for any acts or decisions made by him in good faith while
performing services for the Company or its affiliates and shall use
its best efforts to obtain coverage for him under an insurance policy
(whether now in force or hereinafter obtained) during the term of this
Agreement covering the officers and directors of the Company or its
affiliates. The Company will pay all expenses including attorney's
fees, actually and necessarily incurred by the Executive in connection
with any appeal thereon including the cost of court settlement arising
or alleged to arise from his employment by the Company.
9. Arbitration.
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Any controversy or claim arising out of or in connection with this Agreement
shall be settled by arbitration in accordance with the rules then pertaining of
the American Arbitration Association. Such controversies shall be submitted to
three arbitrators, one arbitrator being selected by the Company, one arbitrator
being selected by the Executive, and the third being selected by the two so
selected by the Company and the Executive or, if they cannot agree upon a third,
by the American Arbitration Association. In the event that either the Company
or the Executive, within one month after any notification of any demand for
arbitration hereunder, shall not have selected its arbitrator and given notice
thereof by registered or certified mail to the other, such arbitrator shall be
selected by the American Arbitration Association. Confirmation of any award in
any such arbitration may be held in any court having jurisdiction of the person
against whom such award is rendered. Regardless of the circumstances giving
rise to the need for arbitration, until such arbitration shall be finally
determined and ended, the base salary of the Executive pursuant to Section 3.1,
subject to the provisions of Section 6, shall be paid monthly until the
expiration of the term of this Agreement, and Bonus pursuant to Section 3.2,
subject to the provisions of Section 6, shall be earned and paid in accordance
with Section 3.2 until the expiration of the term of this agreement. If the
results of such
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arbitration are more favorable to the position taken by the Executive than that
taken by the Company, in the opinion of the arbitrators, then all costs and
expenses incurred by the Executive in connection with such arbitration shall be
paid by the Company.
10. Effective Date.
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This Agreement shall be effective as of January 1, 2001.
IN WITNESS WHEREOF, The parties hereto, intending to be legally bound hereby,
have executed this Agreement as of the day and year first above mentioned.
NVR, INC.
By:___________________________ ________________________________________
XXXX X. XXXXXXX
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