EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
this ___ day of _________, 1997, effective as of July 1, 1997, by and between
Atlantic Gulf Communities Corporation, a Delaware corporation with its principal
executive offices located in Miami, Florida (the "Company"), and J. Xxxxx
Xxxxxxxxxx (hereinafter called the "Executive").
R E C I T A L S
A. The Executive is currently employed as the President and Chief
Executive Officer of the Company.
B. The Executive possesses intimate knowledge of the business,
properties, finances, projects and affairs of the Company, its policies, methods
and personnel.
C. The Board of Directors of the Company (the "Board") recognizes
that the Executive has contributed to the growth and success of the Company, and
desires to assure the Company of the Executive's continued employment and to
compensate him therefor.
D. The Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company,
for the benefit of the Company and its stockholders.
E. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants and agreements set forth herein, the parties agree as follows:
1. Employment.
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1.1 EMPLOYMENT. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to serve the Company on the terms and
conditions set forth herein.
1.2 DUTIES OF EXECUTIVE. During the term of this Agreement,
the Executive shall serve as the President and Chief Executive Officer of the
Company, in accordance with the by-laws
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of the Company (as in effect from time to time) and Delaware law, shall
diligently perform all services as may be assigned to him by the Board (provided
that, such services shall not materially differ in scope from the services
currently and previously provided by the Executive), and shall exercise such
power and authority as may from time to time be delegated to him by the Board.
The Executive shall devote his full time and attention to the business and
affairs of the Company, shall render such services to the best of his ability,
and shall use his best efforts to promote and advance the interests of the
Company.
2. TERM. The term of this Agreement, and the employment of the
Executive hereunder, shall commence on July 1, 1997 (the "Commencement Date")
and shall expire on December 31, 2000 (the "Expiration Date") unless sooner
terminated in accordance with the terms and conditions hereof (the "Term").
3. Compensation.
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3.1 Base Salary.
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(a) During the period commencing on the
Commencement Date through December 31, 1997, the Executive shall receive a gross
base salary at the annual rate of Four Hundred Fifty Thousand Dollars
($450,000), payable in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes.
(b) From and after January 1, 1998, the
Executive shall receive a gross base salary at the annual rate of Four Hundred
Fifty Thousand Dollars ($450,000) (the "Base Salary"), payable in installments
consistent with the Company's normal payroll schedule, subject to applicable
withholding and other taxes. Beginning January 1, 1999, the Base Salary shall be
reviewed, at least annually, by the Board and may, by action and in the sole
discretion of the Board, be increased at any time or from time to time.
3.2 INCENTIVE COMPENSATION. In addition to Executive's Base
Salary, during the period this Agreement is in effect, the Executive shall be
entitled to receive the following bonuses (collectively, the "Incentive
Compensation"):
(a) A bonus equal to Two Hundred and Six
Thousand Dollars ($206,000), less applicable withholding taxes, shall be payable
to the Executive upon the execution of this Agreement. This bonus represents,
and shall be in full and complete satisfaction of, the bonus that the Executive
is entitled to receive for the period from January 1, 1997 through June 30,
1997. In addition, the Executive shall be eligible to receive a bonus equal to
Two Hundred Thousand Dollars ($200,000) for the period from the Commencement
Date through December 31, 1997, 50% of which shall be subject to the achievement
of the objectives set forth on Schedule 1, attached hereto, and 50% of which
shall be determined upon the Board's sole discretion. Such bonus, less
applicable withholding taxes, shall be payable on or before March 15, 1998.
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(b) From January 1, 1998 through the Expiration
Date (unless this Agreement is terminated prior to the Expiration Date) the
Executive shall be eligible to receive an annual bonus of up to Six Hundred
Thousand Dollars ($600,000) (the "Bonus"). Twenty-five percent (25%) of the
Bonus shall be payable upon the Board's sole discretion. Seventy-five percent
(75%) of the Bonus shall be payable solely upon the Company's achievement of the
objectives pre-determined by the Compensation Committee for the calendar year to
which such Bonus applies, which objectives shall be made known to the Executive
through a written notice no later than March 31st of each such calendar year.
The pre-determined objectives set by the Compensation Committee shall be based
upon any or all of the following business criteria for the Company, and/or
specified subsidiaries, and/or business units, or development projects of the
Company and/or specified subsidiaries: (1) net cash flow; (2) net pre-tax or net
after-tax earnings; (3) earnings before interest expense, taxes, depreciation
and amortization; (4) earnings per share; (5) return on equity; (6) return on
capital; (7) return on investment; (8) ratio of debt to stockholder's equity;
and (9) total stockholder return (or total stockholder return as compared to
total return (on a comparable basis) of a publicly available index such as, but
not limited to, the Standard & Poor's 500 Stock Index. Pursuant to Section
162(m) of the Internal Revenue Code, the Compensation Committee shall determine
if the Executive has met the pre-determined objectives. The Bonus shall be
payable on or before March 15th of each year following the year with respect to
which such Bonus shall be earned. Fifty percent (50%) of the Bonus, less
applicable withholding taxes, shall be paid to the Executive in the form of
shares of common stock of the Company, which shares shall be valued at their
fair market value as of the date of the payment. Fifty percent (50%) of the
Bonus, shall be paid to the Executive in the form of cash. No fractional shares
of common stock shall be issued to the Executive hereunder, with any fractional
portion of a share settled in cash.
(c) The Company shall loan to the Executive the
amount of the federal income taxes required to be withheld by the Company with
respect to the portion of the Bonus that is payable to the Executive in the form
of common stock of the Company. The loan shall be evidenced by a recourse
promissory note secured by the shares of common stock granted to the Executive
as part of the Bonus. Interest on the loan shall accrue at the prime rate, as
published in the Wall Street Journal from time to time, and shall be payable
monthly in arrears. The full amount of the principal of the loan, together with
any accrued and unpaid interest, shall be payable one year from the date of the
loan.
Except as otherwise determined by the Compensation Committee, in its sole and
absolute discretion, the periods for which Incentive Compensation is payable
under this Section 3.2, sometimes hereinafter referred to as the Bonus Periods,
shall be the six (6) month period from July 1, to December 31, 1997, and each
calendar year thereafter.
3.3 COMPANY PERFORMANCE/WARRANT RESET INCENTIVE. In connection
with the common stock purchase warrants (the "Warrants") issued by the Company
to AP-AGC, LLC, a shareholder of the Company ("Apollo"), pursuant to those
certain Warrants for the purchase of common stock of Atlantic Gulf Communities
Corporation (the "Warrant Agreements"), in the event,
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and solely in the event, there is no reduction in the Exercise Price (as defined
in the Warrant Agreements) of any of the Warrants as of the Adjustment Date (as
defined in the Warrant Agreements) pursuant to Section 6 of the Warrant
Agreements, then the Executive shall receive from the Company a payment equal to
Two Hundred Fifty Thousand Dollars ($250,000) (the "Warrant Reset Incentive"),
which payment shall be made within ten (10) days of the date on which the final
determination is made as to whether, a reduction of the Exercise Price of the
Warrants is required pursuant to said Section 6. Fifty percent (50%) of the
Warrant Reset Incentive, less applicable withholding taxes, shall be paid to the
Executive in the form of shares of common stock of the Company, which shares
shall be valued at their fair market value as of the date of the payment. Fifty
percent (50%) of the Warrant Reset Incentive, less applicable withholding taxes,
shall be paid to the Executive in the form of cash. No fractional shares of
common stock shall be issued to the Executive hereunder, with any fractional
portion of a share settled in cash.
4. Expense Reimbursement and Other Benefits.
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4.1 Reimbursement of Expenses. During the term of Executive's
employment hereunder, upon the submission of proper substantiation by the
Executive (in the manner and form determined by the Company), and subject to
such rules and guidelines as the Company may from time to time adopt, the
Company shall reimburse the Executive for all reasonable and necessary expenses
actually paid or incurred by the Executive in the course of, and pursuant to,
the business of the Company. The Executive shall account to the Company in
writing for all expenses for which reimbursement is sought and shall supply to
the Company originals of all relevant invoices, receipts or other evidence
reasonably requested by the Company.
4.2 COMPENSATION/BENEFIT PROGRAMS. During the term of this
Agreement, the Executive shall be entitled to participate in all medical,
dental, hospitalization, accidental death and dismemberment, disability, travel
and life insurance plans, and any and all other employee welfare or benefit
plans as are presently and hereinafter offered by the Company to its executives,
including savings, pension, profit-sharing and deferred compensation plans,
subject to the general eligibility and participation provisions set forth in
such plans.
4.3 WORKING FACILITIES. The Company shall furnish the
Executive with an office, secretarial help and such other facilities and
services suitable to his position and adequate for the performance of his duties
hereunder.
4.4 Stock Options.
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(a) Pursuant to the authorization and action by
the Compensation Committee on November 17, 1997, the Executive has been granted
options to purchase up to Three Million (3,000,000) shares of the Company's
common stock (the "Stock Options"), subject to the terms and conditions set
forth in the Stock Incentive Plan and Agreement dated November 17, 1997,
attached hereto as Exhibit "A" (the "Stock Incentive Plan and Agreement").
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(b) Notwithstanding anything to the contrary
contained herein, the Executive may not exercise his Stock Options at any time
prior to the date (the "Shareholder Approval Date") on which the Stock Incentive
Plan and Agreement is approved by a majority vote of the shareholders of the
Company, in satisfaction of Section 162(m) of the Internal Revenue Code. Subject
to the foregoing, the Executive's Stock Options shall become exercisable
according to the following schedule (provided the Executive's employment
hereunder has not been terminated prior to each "Exercisability Date") and
subject to such other terms as may be contained in the Stock Incentive Plan and
Agreement:
Number of Shares That Become
Exercisability Date Available for Purchase
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Shareholder Approval Date 750,000
December 31, 1998 750,000
December 31, 1999 750,000
December 31, 2000 750,000
In the event the shareholders of the Company do not approve the Stock Incentive
Plan and Agreement, in accordance with Section 162(m) of the Internal Revenue
Code, prior to September 30, 1998, any Stock Options granted to the Executive,
pursuant to this Section 4.4, shall be deemed null and void AB INITIO, and the
Executive may terminate this Agreement for "Good Reason," as more fully set
forth in Section 5.5(b) hereof.
(c) The exercise price (the "Option Price") of
the Stock Options shall be the Fair Market Value, as determined under the Stock
Incentive Plan and Agreement, per share, of the common stock of the Company on
the Shareholder Approval Date. The Stock Options shall expire on the seventh
(7th) anniversary of the date of grant, unless the Stock Options shall be
forfeited on an earlier date, as set forth herein and under the Stock Incentive
Plan and Agreement. All other terms and conditions of the Stock Options shall be
as set forth in the Stock Incentive Plan and Agreement.
(d) Notwithstanding the above, any and all
unexercisable and/or unexercised Stock Options shall be forfeited, terminated
and deemed null and void on the dates set forth in Sections 5.1 through 5.5
hereof, as applicable, in the event the Executive's employment hereunder is
terminated pursuant to the applicable section hereof.
(e) (i) In the event that the Option Price
exceeds $5.75 per Share, then the Company shall pay to the Executive as deferred
compensation (the "Deferred Compensation"), in accordance with the Stock
Incentive Plan and Agreement attached as "Exhibit A", the following amounts:
(x) On July 1, 2001, an amount equal to
the product of 1,000,000
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multiplied by the lesser of (1) the Date of Grant Spread and (2) the Date of
Payment Spread on June 30, 2001;
(y) On July 1, 2002, an amount equal to
the product of 1,000,000 multiplied by the lesser of (1) the Date of Grant
Spread and (2) the Date of Payment Spread on June 30, 2002; and
(z) On July 1, 2003, an amount equal to
the product of 1,000,000 multiplied by the lesser of (1) the Date of Grant
Spread and (2) the Date of Payment Spread on June 30, 2003.
(ii) For purposes of this Agreement:
(x) the "Date of Grant Spread" shall
mean the amount, if any, by which (1) the average Fair Market Value of a Share
on each business day in the 30 day period ending on November 17, 1997 exceeds
(2) $5.75;
(y) the "Date of Payment Spread" as of
any date shall mean the amount, if any, by which (1) the Fair Market Value of a
Share on each business day within the 30 day period ending on that date exceeds
(2) $5.75;
(z) the terms "Fair Market Value" and
"Share" shall have those meanings set forth in the Stock Incentive Plan and
Agreement attached as Exhibit "A".
(iii) The Company shall make payment of the
amounts required under this Section 4.4(e) in cash or shares of the Company's
Common Stock, or any combination thereof as determined by the Board, less
applicable withholding taxes.
(iv) Notwithstanding anything to the contrary
contained herein, the Executive shall not receive any Deferred Compensation
pursuant to this Section 4.4(e) unless the Stock Incentive Plan and Agreement is
approved by a majority vote of the shareholders of the Company in satisfaction
of Section 162(m) of the Internal Revenue Code. In addition, no Deferred
Compensation shall be payable under this Section 4.4 after the date on which the
Executive's employment with the Company is terminated if the Company terminates
the Executive's employment for Cause pursuant to Section 5.1 or the Executive
terminates his employment with the Company pursuant to Section 5.5.
4.5 Financed Stock Purchase.
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(a) In addition to the Stock Options provided
for in Section 4.4 above, and in accordance with the Stock Incentive Plan and
Agreement attached as "Exhibit A", the Company shall make loans to the Executive
(the "Loans") equal to the funds necessary for the purchase by the
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Executive of up to an aggregate of One Million Dollars ($1,000,000) worth of the
common stock of the Company, valued at fair market value on the date of
purchase. The Loans shall be secured by a pledge of the shares of common stock
purchased by the Executive. Up to Four Hundred Thousand Dollars ($400,000) of
the Loans shall be recourse loans as to the Executive, and up to Six Hundred
Thousand Dollars ($600,000) of the Loans shall be non-recourse as to the
Executive. The term of the Loans shall be for five (5) years, payable in annual
installments of interest only, with principal and unpaid interest payable on
maturity, and the interest rate of the Loans shall be the prime rate, as
published in the Wall Street Journal from time to time. In addition to other
customary events of default, the Loans shall become due and payable in full upon
(i) the termination by the Company of Executive's employment with the Company
hereunder for cause (as defined in Section 5.1 hereof), or (ii) the termination
by Executive of his employment with the Company hereunder. The terms and
conditions of all promissory notes evidencing the Loans, and the terms and
conditions of all pledge agreements evidencing the pledge of the shares of
common stock as security for the Loans, shall be in a form satisfactory to the
Company. Notwithstanding anything to the contrary contained herein, the
Executive may not purchase any stock pursuant to the provisions of the Section
4.5(a) for a nonrecourse note unless the Stock Incentive Plan and Agreement is
approved by a majority vote of the shareholders of the Company in satisfaction
of Section 162(m) of the Internal Revenue Code.
(b) The Executive agrees that, in the event an
underwriter requests the Company, in connection with an underwritten public
offering of any of its securities, to secure and obtain a lock-up agreement,
from any of the Company's stockholders, optionholders or employees, whereby each
stockholder, optionholder or employee agrees to refrain from selling,
transferring, pledging or otherwise conveying his securities for a certain
period (the "Lock-up"), the Executive shall execute and deliver to the Company a
Lock-up, in form and substance acceptable to the Company and the underwriters of
such offering, within ten (10) days of the receipt of a written request from the
Company.
4.6 OTHER BENEFITS. The Executive shall be entitled to four
(4) weeks of vacation each calendar year during the term of this Agreement, to
be taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by Executive
during any calendar year may not be carried forward into any succeeding calendar
year. The Executive shall not be entitled to cash in lieu of unused vacation
days. The Executive shall continue to receive the appropriate benefits currently
available to the Executive, under the terms, if any, as the Board of the Company
shall from time to time determine.
5. Termination.
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5.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, in its sole and absolute discretion, upon written notice to the
Executive, to terminate the Executive's employment hereunder, for cause. For
purposes of this Agreement, the term "cause" shall mean:
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(i) an action or omission of the Executive which
constitutes a willful and material breach of this Agreement which is not cured
within fifteen (15) days after receipt by the Executive of written notice of
same,
(ii) fraud, embezzlement, misappropriation of
funds, breach of trust or any other dishonest and injurious conduct against the
Company, committed by the Executive,
(iii) conviction of the Executive with respect to
a felony or any other crime that involves moral turpitude, unless the conviction
is attributable to an act committed before the date of this Agreement and the
Company had actual knowledge of such act prior to its execution of this
Agreement,
(iv) from and after the date of this Agreement,
any act committed by the Executive involving the excess consumption of alcohol
or drugs, or any other acts of moral turpitude committed in such a manner as to
publicly and adversely reflect upon the reputation or stature of the Company,
(v) gross or continuing negligence in connection
with the performance of the Executive's duties hereunder, or
(vi) the material and willful or knowing failure
or refusal by the Executive, or the inability of the Executive (other than as a
result of a disability or death), to perform his duties hereunder, or in
accordance with the lawful written instructions of the Board of Directors.
Any termination for cause shall be made in writing to the Executive, which
notice shall set forth the acts or omissions upon which the Company is relying
for such termination. The Executive shall have the right to address the Board
regarding the acts set forth in the notice of termination. Upon any termination
pursuant to this Section 5.1, the Company shall (i) pay to the Executive any
accrued and earned but unpaid Base Salary to the date of termination and (ii)
pay to the Executive his accrued and earned but unpaid Incentive Compensation,
if any, for any Bonus Period ending on or before the date of the termination of
Executive's employment with the Company. Any and all unexercisable and/or
unexercised Stock Options as of the date of the Executive's termination under
this Section 5.1 shall be forfeited, terminated and deemed null and void five
(5) business days from the date of termination. The Company shall have no
further liability hereunder (other than for reimbursement for reasonable and
necessary business expenses incurred prior to the date of termination, subject,
however, to the provisions of Section 4.1). Upon any termination pursuant to
this Section 5.1, the Executive shall be deemed to have resigned as Chairman of
the Board of the Company, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter and to deliver such letter to
the Board.
5.2 DISABILITY. The Company shall at all times have the right,
upon written notice
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to the Executive, to terminate the Executive's employment hereunder, if the
Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform his obligations hereunder for a period of
180 days in any 12-month period. The Company shall have sole discretion based
upon competent medical advice to determine whether the Executive is or continues
to be, disabled. Upon any termination pursuant to this Section 5.2, the Company
shall (i) pay to the Executive any accrued and earned but unpaid Base Salary
through the effective date of termination specified in such notice, (ii) pay to
the Executive his accrued and earned but unpaid Incentive Compensation, if any,
for any Bonus Period ending on or before the date on which the Executive first
becomes disabled, and (iii) pay to the Executive his Base Salary, in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes, for six (6) months from the date on
which the Executive first becomes disabled, and (iv) pay to the Executive the
Deferred Compensation pursuant to Section 4.4(e). Any and all unexercisable
and/or unexercised Stock Options as of the Executive's termination under this
Section 5.2 shall be forfeited, terminated and deemed null and void ninety (90)
days from the date of termination. The Company shall have no further liability
hereunder, other than for (A) reimbursement for reasonable and necessary
business expenses incurred prior to the date of termination (subject, however to
the provisions of Section 4.1) and (B) any disability benefits provided to the
Executive by the Company pursuant to Section 4.2 hereof. Upon any termination
pursuant to this Section 5.2, the Executive shall be deemed to have resigned as
Chairman of the Board of the Company, and if required by the Board, the
Executive hereby agrees to immediately execute a resignation letter and to
deliver such letter to the Board.
5.3 DEATH. In the event of the death of the Executive during
the term of his employment hereunder, the Company shall (i) pay to the estate of
the deceased Executive any accrued and earned but unpaid Base Salary through the
Executive's date of death, (ii) pay to the estate of the deceased Executive his
accrued and earned but unpaid Incentive Compensation, if any, for any Bonus
Period ending on or before the Executive's date of death, and (iii) pay to the
estate of the deceased Executive, the Executive's Base Salary, in installments
consistent with the Company's normal payroll schedule, subject to applicable
withholding and other taxes, for six (6) months from the date of the Executive's
death, and (iv) pay to the Executive the Deferred Compensation pursuant to
Section 4.4(e). Any and all unexercisable and/or unexercised Stock Options as of
the date of the Executive's death shall be forfeited, terminated and deemed null
and void ninety (90) days from the date of the Executive's death. The Company
shall have no further liability hereunder other than for (A) reimbursement for
reasonable and necessary business expenses incurred prior to the date of the
Executive's death (subject, however to the provisions of Section 4.1) and (B)
any death or life insurance benefits provided to the Executive by the Company
pursuant to Section 4.2 hereof).
5.4 TERMINATION WITHOUT CAUSE. The Company shall at all times
have the right, in its sole and absolute discretion, upon written notice to the
Executive, to terminate the Executive's employment hereunder. Upon any
termination pursuant to this Section 5.4 (that is not a termination under any of
Sections 5.1, 5.2, 5.3, or 5.5), the Company shall (i) pay to the Executive any
accrued
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and earned but unpaid Base Salary through the effective date of termination
specified in such notice, (ii) pay to the Executive the accrued and earned but
unpaid Incentive Compensation, if any, for any Bonus Period ending on or before
the effective date of termination in such notice, and (iii) thereafter, pay to
the Executive his Base Salary, in installments consistent with the Company's
normal payroll schedule, subject to applicable withholding and other taxes,
until the earlier of (A) the date which is two (2) years from the date of the
Executive's termination, or (B) the Expiration Date, and (iv) pay to the
Executive the Deferred Compensation pursuant to Section 4.4(e). Further, any
Stock Options that have not become exercisable prior to the date of the
Executive's termination shall become immediately exercisable upon the
termination by the Company of Executive's employment under this Section 5.4
prior to the Expiration Date. Any and all unexercised Stock Options shall be
forfeited, terminated and deemed null and void ninety (90) days from the date on
which the Executive's employment with the Company terminates. The Company shall
have no further liability hereunder (other than for reimbursement for reasonable
and necessary business expenses incurred prior to the date of termination,
subject, however, to the provisions of Section 4.1). Upon any termination
pursuant to this Section 5.4, the Executive shall be deemed to have resigned as
Chairman of the Board of the Company, and if required by the Board, the
Executive hereby agrees to immediately execute a resignation letter and to
deliver such letter to the Board.
5.5 Termination by Executive.
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(a) The Executive shall at all times have the
right, upon sixty (60) days written notice to the Company, to terminate the
Executive's employment with the Company hereunder. Upon any termination pursuant
to this Section 5.5(a) (other than a termination due to Executive's death,
disability, or a termination by the Executive for "Good Reason," as described
below), the Company shall (i) pay to the Executive any accrued and earned but
unpaid Base Salary through the effective date of termination specified in the
written notice by the Executive and (ii) pay to the Executive his accrued and
earned but unpaid Incentive Compensation, if any, for any Bonus Period ending on
or before the termination of Executive's employment with the Company. Any and
all unexercisable and/or unexercised Stock Options as of the Executive's
termination under this Section 5.5(a) shall be forfeited, terminated and deemed
null and void thirty (30) days from the date of the Executive's termination of
employment with the Company. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable and necessary business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1).
(b) In the event the shareholders of the Company
do not approve the Stock Incentive Plan and Agreement, pursuant to the terms of
Section 4.4 hereof, the Executive may terminate his employment hereunder for
"Good Reason" at any time before October 15, 1998. Upon the Executive's
termination of his employment with the Company for Good Reason, the Company
shall (i) pay to the Executive any accrued and earned but unpaid Base Salary
through the effective date of termination specified in the written notice by the
Executive, and (ii) pay to the Executive his accrued and earned but unpaid
Incentive Compensation, if any, for any Bonus Period ending on or
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before the termination of Executive's employment with the Company. In addition,
if, and only to the extent that, Incentive Compensation would have been payable
to the Executive for the Bonus Period in which the Executive terminates his
employment with the Company pursuant to this Section 5.5(b), based upon
satisfaction of the pre-determined objectives set by the Compensation Committee
for such Bonus Period, the Company shall pay the Executive a pro rata share
(based upon the ratio of the period during the Bonus Period in which the
Executive was employed with the Company, as compared to the total Bonus Period)
of the Incentive Compensation that is earned for the Bonus Period in which his
employment terminates, payable within two and one-half (2 1/2) months after the
end of such Bonus Period. Further, upon the Executive's termination of his
employment with the Company pursuant to this Section 5.5(b), the provisions of
Section 6.1 hereof shall terminate. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable and necessary business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1). In the event the shareholders of the Company do not
approve the Stock Incentive Plan and Agreement, in accordance with Section
162(m) of the Internal Revenue Code, prior to September 30, 1998, any Stock
Options granted to the Executive, pursuant to Section 4.4 hereof, any rights to
Deferred Compensation under Section 4.4(e) and any rights to purchase shares for
a nonrecourse note under Section 4.5(a) shall be deemed null and void AB INITIO,
whether or not Executive terminates his employment pursuant to this Section
5.5(b).
Upon any termination pursuant to this Section 5.5, the Executive shall be deemed
to have resigned as Chairman of the Board of the Company, and if required by the
Board, the Executive hereby agrees to immediately execute a resignation letter
and to deliver such letter to the Board.
5.6 SURVIVAL. The provisions of this Article 5 shall survive
any termination of this Agreement, as applicable.
6. Restrictive Covenants.
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6.1 NON-COMPETITION. At all times while the Executive is
employed by the Company and unless (i) the Executive's employment with the
Company is terminated prior to the Expiration Date by the Company without cause
(as defined in Section 5.1) or (ii) the Executive terminates his employment with
the Company for Good Reason (as defined in Section 5.5), for a two (2) year
period after the termination of the Executive's employment with the Company, the
Executive shall not, directly or indirectly, engage in or have any interest in
any sole proprietorship, partnership, corporation or business or any other
person or entity (whether as an employee, officer, director, partner, agent,
security holder, creditor, consultant or otherwise) that directly or indirectly
(or through any affiliated entity) engages in competition with the Company;
provided that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or
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automated dissemination of quotations of securities prices in common use, so
long as the Executive does not control, acquire a controlling interest in or
become a member of a group which exercises direct or indirect control or, more
than five percent of any class of capital stock of such corporation.
6.2 NONDISCLOSURE. The Executive shall not at any time
divulge, communicate, use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any Confidential Information
(as hereinafter defined) pertaining to the business of the Company. Any
Confidential Information or data now or hereafter acquired by the Executive with
respect to the business of the Company (which shall include, but not be limited
to, information concerning the Company's financial condition, prospects,
technology, customers, suppliers, sources of leads and methods of doing
business) shall be deemed a valuable, special and unique asset of the Company
that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company with respect to all of such
information. For purposes of this Agreement, "Confidential Information" means
information disclosed to the Executive or known by the Executive as a
consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by the Executive) prior to or
after the date hereof, and not generally known, about the Company or its
business. Notwithstanding the foregoing, nothing herein shall be deemed to
restrict the Executive from disclosing Confidential Information to the extent
required by law.
6.3 NONSOLICITATION OF EMPLOYEES AND CLIENTS. At all times
while the Executive is employed by the Company and for a two (2) year period
after the termination of the Executive's employment with the Company for any
reason, the Executive shall not, directly or indirectly, for himself or for any
other person, firm, corporation, partnership, association or other entity (a)
employ or attempt to employ, or solicit the employment of, or enter into any
contractual arrangement with, any employee or former employee of the Company,
unless such employee or former employee has not been employed by the Company for
a period in excess of six months, and/or (b) call on or solicit any of the
actual or targeted prospective clients of the Company on behalf of any person or
entity in connection with any business competitive with the business of the
Company, nor shall the Executive make known the names and addresses of such
clients or any information relating in any manner to the Company's trade or
business relationships with such customers, other than in connection with the
performance of Executive's duties under this Agreement.
6.4 BOOKS AND RECORDS. All books, records, and accounts
relating in any manner to the customers or clients of the Company, whether
prepared by the Executive or otherwise coming into the Executive's possession,
shall be the exclusive property of the Company and shall be returned immediately
to the Company on termination of the Executive's employment hereunder or on the
Company's request at any time.
6.5 DEFINITION OF COMPANY. Solely for purposes of this Section
6, the term "Company" also shall include any existing or future subsidiaries of
the Company that are operating
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during the time periods described herein and any other entities that directly or
indirectly, through one or more intermediaries, control, are controlled by or
are under common control with the Company during the periods described herein.
6.6 ACKNOWLEDGMENT BY EXECUTIVE. The Executive acknowledges
and confirms that (a) the restrictive covenants contained in this Section 6 are
reasonably necessary to protect the legitimate business interests of the
Company, and (b) the restrictions contained in this Section 6 (including without
limitation the length of the term of the provisions of this Section 6) are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or
coercion of any kind. The Executive further acknowledges and confirms that his
full, uninhibited and faithful observance of each of the covenants contained in
this Section 6 will not cause him any undue hardship, financial or otherwise,
and that enforcement of each of the covenants contained herein will not impair
his ability to obtain employment commensurate with his abilities and on terms
fully acceptable to him or otherwise to obtain income required for the
comfortable support of him and his family and the satisfaction of the needs of
his creditors. The Executive acknowledges and confirms that his special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company in violation of the
terms of this Section 6. The Executive further acknowledges that the
restrictions contained in this Section 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company's successors and
assigns.
6.7 REFORMATION BY COURT. In the event that a court of
competent jurisdiction shall determine that any provision of this Section 6 is
invalid or more restrictive than permitted under the governing law of such
jurisdiction, then only as to enforcement of this Section 6 within the
jurisdiction of such court, such provision shall be interpreted and enforced as
if it provided for the maximum restriction permitted under such governing law.
6.8 EXTENSION OF TIME. If the Executive shall be in violation
of any provision of this Section 6, then each time limitation set forth in this
Section 6 shall be extended for a period of time equal to the period of time
during which such violation or violations occur. If the Company seeks injunctive
relief from such violation in any court, then the covenants set forth in this
Section 6 shall be extended for a period of time equal to the pendency of such
proceeding including all appeals by the Executive.
6.9 SURVIVAL. The provisions of this Section 6 shall survive
any termination of this Agreement, as applicable.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and
-13-
restraining any violation of any or all of the covenants contained in Section 6
of this Agreement by the Executive or any of his affiliates, associates,
partners or agents, either directly or indirectly, and that such right to
injunction shall be cumulative and in addition to whatever other remedies at law
or equity the Company may possess.
8. MEDIATION. Except to the extent the Company has the right to seek
an injunction under Section 7 hereof, in the event a dispute arises out of or
relates to this Agreement, or the breach thereof, and if the dispute cannot be
settled through negotiation, the parties hereby agree first to attempt in good
faith to settle the dispute by mediation administered by the American
Arbitration Association under its Employment Mediation Rules before resorting to
litigation or some other dispute resolution procedure.
9. SECTION 162(M) LIMITS. For purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (collectively, "Section 162(m)"), for each fiscal year of the
Company, payment of the portion (the "Section 162(m) Portion") of the
Executive's Incentive Compensation under Section 3.2 earned for that fiscal year
that would not otherwise be deductible by reason of Section 162(m) (determined
after taking into account all other remuneration required to be taken into
account pursuant to Section 162(m) for the year), shall be subject to the
following conditions: (i) the pre-determined objectives referenced in Section
3.2(b) hereof shall be determined by the Compensation Committee of the Company,
at such times as may be required for the Section 162(m) Portion to be deductible
under Section 162(m); (ii) the Company's attainment of the pre-determined
objectives shall be determined by the Compensation Committee, in its sole
discretion, (iii) payment of the Section 162(m) Portion shall be subject to the
prior approval by the shareholders of the Company of the material terms of the
pre-determined objectives referenced in Section 3.2(b) hereof (including the
maximum amount of Incentive Compensation that may be paid to the Executive for
any calendar year pursuant to clause (iv) of this Section 9); and (iv) the sum
of (A) the Incentive Compensation under Section 3.2 and (B) the Warrant Reset
Incentive under Section 3.3, payable to the Executive for any calendar year
shall not exceed One Million Dollars ($1,000,000). Notwithstanding any other
provision of this Agreement to the contrary, compensation otherwise payable
hereunder to the Executive that, for any year, does not satisfy any of the
exceptions to the deduction limitations set forth under Section 162(m), shall
not, for such year, exceed the deduction limitation amount set forth under
Section 162(m). In addition, the grant of Stock Options pursuant to Section 4.4
hereof, the payment of any Deferred Compensation made Section 4.4(e) and any
rights to purchase shares of the Company's common stock for a nonrecourse note
under Section 4.5(a) all shall be subject to and conditioned upon (y) the
approval of the Compensation Committee of the Company and (z) the approval by
the shareholders of the Company of the Stock Incentive Plan and Agreement
pursuant to which the Stock Options shall be granted.
10. ASSIGNMENT. Neither party shall have the right to assign or
delegate his rights or obligations hereunder, or any portion thereof, to any
other person without the prior written consent of the other party, except that
the Company may assign its rights and obligations to a successor in
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interest in the event of a sale, merger or reorganization of the Company.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between the Executive and the Company (or
any of its affiliates) with respect to such subject matter. This Agreement may
not be modified in any way unless by a written instrument signed by both the
Company and the Executive.
13. NOTICES: All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent (i) if to the Company, addressed to Atlantic Gulf
Communities Corporation, 0000 X. Xxxxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000,
Attention: Corporate Secretary, and (ii) if to the Executive, to his address as
reflected on the payroll records of the Company, or to such other address as
either party hereto may from time to time give notice of to the other.
14. BENEFITS; Binding Effect. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
15. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
-15-
16. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation. The failure by either party to
exercise any rights hereunder shall not be construed as a waiver by such party
of such right or of such party's future exercise of such right.
17. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable costs
and attorneys' fees of the other. The terms of this Section 17 shall survive any
termination of this Agreement.
18. WAIVER OF JURY TRIAL. The Executive hereby knowingly, voluntarily
and intentionally waives the right he may have to a trial by jury in respect of
any litigation based hereon, or arising out of, under or in connection with this
Agreement and any agreement, document or instrument contemplated to be executed
in conjunction herewith, or any course of conduct, course of dealing, statements
(whether verbal or written) or actions of any party hereto.
19. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
20. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the Executive and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
-16-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY:
ATLANTIC GULF COMMUNITIES
CORPORATION, a Delaware corporation
By: ______________________________________
Name:
Title:
COMPENSATION COMMITTEE OF
ATLANTIC GULF COMMUNITIES CORPORATION,
a Delaware Corporation
By: ________________________________
Name:
Title: Chairman
EXECUTIVE:
___________________________________________
J. Xxxxx Xxxxxxxxxx
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SCHEDULE 1
1997 OBJECTIVES
Achieving the projected "cash flow" in the attached "AGC Business Plan" for the
4th Quarter of 1997 for the following items:
Net Contributions
-----------------
1. Bulk Land Sales $ 14,472.00
1. Scattered Homesites 766.00
1. Subdivision Homesites 2,145.00
1. Contracts, Mortgages & other Receivables 6,055.00
1. Overhead (2,886.00)
and maintaining the P&L margins associated with these cash flows.
-18-
ATLANTIC GULF COMMUNITIES CORPORATION
STOCK INCENTIVE PLAN AND AGREEMENT
FOR
J. XXXXX XXXXXXXXXX
Agreement
---------
1. GRANT OF OPTION. Atlantic Gulf Communities Corporation, a Delaware
corporation (the "Company") hereby grants, as of November 17, 1997 to J. Xxxxx
Xxxxxxxxxx (the "Optionee") an option (the "Option") to purchase up to Three
Million (3,000,000) shares of the Company's Common Stock, $.01 par value per
share (the "Shares"), at an exercise price per share equal to the Option Price.
The Option shall be subject to the terms and conditions set forth herein. The
Option is a nonqualified stock option, and not an Incentive Stock Option
2. STOCK OPTION PLAN. This Agreement shall also serve as the plan under which
the Option is granted, pursuant to the regulations promulgated under Section 162
of the Internal Revenue Code. The maximum number of shares that may be subject
to acquisition under the Option may not exceed Three Million (3,000,000) shares.
3. DEFINITIONS. As used herein, the following terms shall have the meaning
indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall have the meaning set forth for such term in Section 5.1 of
the Employment Agreement.
(c) "Committee" shall mean a committee appointed by the Board (the
"Committee") which shall be composed of two or more Directors all of whom shall
be Outside Directors. The membership of the Committee shall be constituted so as
to comply at all times with the applicable requirements of Rule 16b-3
promulgated under the Securities Exchange Act and Section 162(m) of the Internal
Revenue Code. The Committee shall serve at the pleasure of the Board and shall
have the powers designated herein and such other powers as the Board may from
time to time confer upon it.
(d) "Common Stock" shall mean the Company's Common Stock, par value $.01 per
share.
(e) "Director" shall mean a member of the Board.
(f) "Employment Agreement" shall mean that certain Employment Agreement
entered into by and between the Company and the Optionee, of even date herewith.
"Fair Market Value" of a Share on any date of reference shall mean the
"Closing Price" (as
defined below) of the Common Stock on such date (or if such date is not a
business day, on the immediately preceding business day), unless the Committee
in its sole discretion shall determine otherwise in a fair and uniform manner.
For the purpose of determining Fair Market Value, the "Closing Price" of the
Common Stock on any day shall be the last reported sale price of the Common
Stock on the National Association of Securities Dealers' National Market System,
on an national securities exchange, or, if no such sales price is reported, the
mean between the closing high bid and low asked quotations for such day of
Common Stock on such system, as reported in any newspaper of general
circulation. If no quotation is made for the applicable day, the Fair Market
Value shall be determined in the manner set forth in the preceding sentence
using quotations for the next preceding day for which there were quotations,
provided that such quotations shall have been made within the ten (10) "trading"
days preceding the applicable day. Notwithstanding the foregoing, if no such
information is available, or if otherwise determined necessary by the Committee,
the Fair Market Value shall be determined in good faith by the Committee or the
Board in a fair and uniform manner.
(h) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(i) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(j) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(k) "Option" (when capitalized) shall mean any option granted under
this Agreement.
(l) "Option Price" shall mean the Fair Market Value of a Share on the
Shareholder Approval Date.
(m) "Outside Director" shall mean a member of the Board who qualifies
as an "outside director" under Section 162(m) of the Internal Revenue Code and
the regulations thereunder and as a "Non-Employee Director" under Rule 16b-3
promulgated under the Securities Exchange Act.
(n) "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(o) "Share" shall mean a share of Common Stock..
(p) "Shareholder Approval Date" shall mean the date on which this Stock
Incentive Plan and Agreement is approved by a majority vote of the shareholders
of the Company, in satisfaction of Section 162(m) of the Internal Revenue Code.
Exercise Schedule.
-----------------
(a) Except as otherwise provided in Sections 7 or 10 of this Agreement,
the Option shall
2
be exercisable in whole or in part, and cumulatively, according to the following
schedule:
Exercisability Date Number of Shares That Become Available for Purchase
------------------- ---------------------------------------------------
Shareholder Approval Date 750,000
December 31, 1998 750,000
December 31, 1999 750,000
December 31, 2000 750,000
(b) Notwithstanding the foregoing, in the event the Optionee's
employment with the Company is terminated by the Company without Cause, pursuant
to Section 5.4 of the Employment Agreement, any portion of the Option that has
not become exercisable prior to the date of Optionee's termination shall become
immediately exercisable upon termination by the Company of the Optionee's
employment.
(c) The Option shall terminate on, and in no event shall the Option be
exercisable after, November 16, 2004.
5. METHOD OF EXERCISE. This Option shall be exercisable in whole or in part in
accordance with the exercise schedule set forth in Section 4 hereof by written
notice which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such Shares as may be required by the Company. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The written notice shall be accompanied by payment
of the exercise price. This Option shall be deemed to be exercised after both
(a) receipt by the Company of such written notice accompanied by the exercise
price and (b) arrangements that are satisfactory to the Committee in its sole
discretion have been made for Optionee's payment to the Company of the amount
that is necessary to be withheld in accordance with applicable Federal or state
withholding requirements. No Shares will be issued pursuant to the Option unless
and until such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares then may be traded.
6. METHOD OF PAYMENT. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of the Optionee: (a) cash;
(b) check; or (c) such other consideration or in such other manner as may be
determined by the Committee or the Board, which other method, in the discretion
of the Committee or the Board may include, without limitation, payment of the
exercise price in whole or in part (i) with Shares, (ii) by a promissory note
payable to the order of the Company in a form acceptable to the Committee, or
(iii) by the Company retaining from the Shares to be delivered upon exercise of
the Option that number of Shares having a Fair Market Value on the date of
exercise equal to the option price for the number of Shares with respect to
which the Optionee exercises the Option or by any other form of cashless
exercise procedure approved by the Committee or the Board.
3
7. TERMINATION OF OPTION. Any and all unvested or unexercised portion of the
Option shall terminate and become null and void at the time of the earliest to
occur of the following:
(a) five (5) business days after the date the Optionee's employment with the
Company is terminated for Cause, pursuant to Section 5.1 of the Employment
Agreement;
(b) ninety (90) days after the date the Optionee's employment with the
Company is terminated (i) as a result of a disability of the Optionee, pursuant
to Section 5.2 of the Employment Agreement, (ii) as a result of the death of the
Optionee, pursuant to Section 5.3 of the Employment Agreement, or (iii) by the
Company without Cause, pursuant to Section 5.4 of the Employment Agreement; or
(c) thirty (30) days after the date the Optionee terminates his employment
with the Company, pursuant to Section 5.5 (a) of the Employment Agreement.
Also, the Committee or the Board, in its sole discretion may by giving
written notice (the "cancellation notice") cancel, effective upon the date of
the consummation of any corporate transaction described in Section 10(a) of this
Agreement or the consummation of any reorganization, merger, consolidation or
other transaction in which the Company does not survive, any Option that remains
unexercised on such date. Such cancellation notice shall be given thirty (30)
days prior to the proposed date of such cancellation and may be given either
before or after approval of such corporate transaction.
8. Transferability.
---------------
(a) The Option is not transferable otherwise than by will or the laws of
descent and distribution, and during the lifetime of the Optionee the Option
shall be exercisable only by the Optionee. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee.
(b) Unless the prior written consent of the Committee or the Board is
obtained and the transaction does not violate the requirements of Rule 16b-3
promulgated under the Securities Exchange Act, no Shares acquired pursuant to
the exercise of an Option may be sold, assigned, pledged or otherwise
transferred prior to the expiration of the six-month period following the date
on which the Option was granted.
9. NO RIGHTS OF STOCKHOLDERS. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of any portion of the Option prior to
the date of exercise of the Option.
4
10. CHANGE IN CONTROL. This Option shall become immediately fully exercisable in
the event of a "Change in Control" or in the event that the Committee or the
Board exercises its discretion to provide a cancellation notice with respect to
the Option pursuant to Section 7 hereof. For this purpose, the term "Change in
Control" shall mean:
(a) Approval by the shareholders of the Company of (i) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or (ii) a liquidation or dissolution of the Company or (iii)
the sale of all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned); or
(b) Individuals who, as of the date hereof, constitute the Board (as of the
date hereof the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that (i) any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a- 11 of Regulation
14A promulgated under the Securities Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board, and (ii) any person becoming a director subsequent to the date hereof who
is nominated by AP-AGC, LLC, a shareholder of the Company, and who replaces a
member of the Incumbent Board nominated by AP-AGC, LLC, shall be for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or
(c) The acquisition (other than from the Company) by any person, entity or
"group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, (excluding, for this purpose, the Company or its subsidiaries, or
any employee benefit plan of the Company or its subsidiaries which acquires
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act) of 30% or more of either the then outstanding Common
Stock or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors.
11. Adjustment of Shares.
--------------------
(a) If at any time while unexercised Options are outstanding, there shall be
any increase or decrease in the number of issued and outstanding Shares through
the declaration of a stock dividend or through any recapitalization resulting in
a stock split-up, combination or exchange of Shares, then and in such event,
appropriate adjustment shall be made in the number of Shares and the exercise
price per Share thereof subject to any outstanding Option, so that the same
percentage
5
of the Company's issued and outstanding Shares shall remain subject to purchase
at the same aggregate exercise price.
(b) The Committee or the Board may change the terms of Options outstanding
under this Agreement, with respect to the option price or the number of Shares
subject to the Options, or both, when, in the Committee's or Board's sole
discretion, such adjustments become appropriate so as to preserve but not
increase benefits under this Agreement.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made to, the number of or exercise price for Shares then subject to
outstanding Options granted under this Agreement.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under this Agreement shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
12. Issuance of Shares.
------------------
(a) The Company shall not be obligated to issue any Shares unless it is
advised by counsel of its selection that it may do so without violation of the
applicable Federal and State laws pertaining to the issuance of securities, and
may require any stock so issued to bear a legend, may give its transfer agent
instructions, and may take such other steps, as in its judgment are reasonably
required to prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon exercise of any
Option, the Committee or the Board may require such agreements or undertakings
as the Committee or the Board may deem necessary or advisable to facilitate
compliance with any applicable law or regulation including, but not limited to,
the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised,
that he is acquiring the Shares to be issued to him
for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares;
and
(ii)a representation, warranty and/or agreement to be
bound by any
6
legends endorsed upon the certificate(s) for such
Shares that are, in the opinion of the Committee or
the Board, necessary or appropriate to facilitate
compliance with the provisions of any securities laws
deemed by the Committee or the Board to be applicable
to the issuance and transfer of such Shares.
13. Deferred Compensation.
---------------------
(i) In the event that the Option Price exceeds $5.75 per
Share, then the Company shall pay to the Executive as deferred compensation (the
"Deferred Compensation"), the following amounts:
(x) On July 1, 2001, an amount equal to the product
of 1,000,000 multiplied by the lesser of (1) the Date
of Grant Spread and (2) the Date of Payment Spread on
June 30, 2001;
(y) On July 1, 2002, an amount equal to the product
of 1,000,000 multiplied by the lesser of (1) the Date
of Grant Spread and (2) the Date of Payment Spread on
June 30, 2002; and
(z) On July 1, 2003, an amount equal to the product
of 1,000,000 multiplied by the lesser of (1) the Date
of Grant Spread and (2) the Date of Payment Spread on
June 30, 2003.
(ii) For purposes of this Agreement:
(x) the "Date of Grant Spread" shall mean the amount,
if any, by which (1) the average Fair Market Value of
a Share on each business day in the 30 day period
ending November 17, 1997 exceeds (2) $5.75; and
(y) the "Date of Payment Spread" as of any date shall
mean the amount, if any, by which (1) the average
Fair Market Value of a Share on each business day in
the 30 day period ending on that date exceeds (2)
$5.75.
(iii) The Company shall make payment of the amounts
required under this Section 13 in cash or Shares, or any combination thereof as
determined by the Company, less applicable withholding taxes.
14. FINANCED STOCK PURCHASE. In addition to the Stock Options provided for in
Section 1 hereof, the Company shall make loans to the Executive (the "Loans")
equal to the funds necessary for the purchase by the Executive of up to an
aggregate of One Million Dollars ($1,000,000) worth of the common stock of the
Company, valued at fair market value on the date of purchase. The Loans shall be
secured by a pledge of the shares of common stock purchased by the Executive. Up
to Four Hundred Thousand Dollars ($400,000) of the Loans shall be recourse loans
as to the Executive, and up to Six Hundred Thousand Dollars ($600,000) of the
Loans shall be non-recourse as to the
7
Executive. The term of the Loans shall be for five (5) years, payable in annual
installments of interest only, with principal and unpaid interest payable on
maturity, and the interest rate of the Loans shall be the prime rate, as
published in the Wall Street Journal from time to time. In addition to other
customary events of default, the Loans shall become due and payable in full upon
(i) the termination by the Company of Executive's employment with the Company
hereunder for cause (as defined in Section 5.1 of the Employment Agreement with
the Company), or (ii) the termination by Executive of his employment with the
Company hereunder. The terms and conditions of all promissory notes evidencing
the Loans, and the terms and conditions of all pledge agreements evidencing the
pledge of the shares of common stock as security for the Loans, shall be in a
form satisfactory to the Company.
15. SHAREHOLDER APPROVAL REQUIREMENT. Notwithstanding anything to the
contrary herein, the Optionee's rights hereunder shall be subject to and
conditioned upon approval of this Stock Incentive Plan and Agreement by a
majority vote of the shareholders of the Company, in satisfaction of Section
162(m) of the Internal Revenue Code.
16. ADMINISTRATION.
--------------
(a) This Agreement shall be administered by the Committee or the Board.
(b) The Committee or the Board, from time to time, may adopt rules and
regulations for carrying out the purposes of this Agreement. The determinations
by the Committee or the Board, and the interpretation and construction of any
provision of this Agreement by the Committee or the Board, shall be final and
conclusive.
17. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Option nor this Agreement
shall confer upon the Optionee any right to continued employment or service with
the Company.
18. LAW GOVERNING. This Agreement shall be governed in accordance with and
governed by the internal laws of the State of Delaware.
19. INTERPRETATION. The Optionee accepts the Option subject to all the
terms and provisions of this Agreement. The undersigned Optionee hereby accepts
as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions arising under the this Agreement.
20. NOTICES. Any notice under this Agreement shall be in writing and shall
be deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company's Secretary at 0000 X. Xxxxxxxx Xxxxx, Xxxxx,
Xxxxxxx 00000, or if the Company should move its principal office, to such
principal office, and, in the case of the Optionee, to the Optionee's last
permanent address as shown on the Company's records, subject to the right of
either party to designate some other address at any time hereafter in a notice
satisfying the requirements of this Section.
8
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
COMPANY:
ATLANTIC GULF COMMUNITIES
CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
COMPENSATION COMMITTEE OF
ATLANTIC GULF COMMUNITIES CORPORATION
By:
--------------------------------
Name:
------------------------------
Title: Chairman
Dated: _______________ OPTIONEE:
By:
------------------------------
J. XXXXX XXXXXXXXXX
9
ATLANTIC GULF COMMUNITIES
0000 X. XXXXXXXX XXXXX
XXXXX, XXXXXXX 00000
November 26, 1997
J. Xxxxx Xxxxxxxxxx
President and
Chief Executive Officer
Atlantic Gulf Communities Corporation
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx
Re: Employment Agreement dated effective as of July 1, 1997
between Atlantic Gulf Communities Corporation (the "Company")
and J. Xxxxx Xxxxxxxxxx (the "Executive")
Dear Xx. Xxxxxxxxxx:
This letter is to modify, as set forth below, the above-referenced
Employment Agreement between the Company and you (the Agreement"). The
Agreement, as modified hereby, remains in full force and effect. (Any
capitalized terms used but not defined herein shall have the meaning ascribed to
them in the Agreement.)
1. Section 3.2(b) of the Agreement provides in the third to last
sentence that "[f]ifty percent (50%) of the Bonus, less applicable withholding
taxes, shall be paid to the Executive in the form of shares of common stock of
the Company, which shares shall be valued at their fair market value as of the
date of the payment." Notwithstanding anything to the contrary in the Agreement,
the third to last sentence of Section 3.2(b) of the Agreement shall only become
effective if it is approved by the Company's stockholders, which approval shall
be a majority of the total votes cast on the matter in person or by proxy. Also,
until and unless the above-mentioned stockholders approval is obtained, the
Bonus shall be payable one hundred percent (100%) in the form of cash, but if
such stockholders approval is obtained before March 15, 1999, the third to last
sentence of Section 3.2(b) of the Agreement shall be effective for all Bonus
Periods, commencing with calendar year 1998.
2. Section 3.3 of the Agreement provides in the third to last sentence
that "[f]ifty percent (50%) of the Warrant Reset Incentive, less applicable
withholding taxes, shall be paid to the Executive in the form of shares of
common stock of the Company, which shares shall be valued at their fair market
value as of the date of payment." Notwithstanding anything to the contrary in
the Agreement, the third to last sentence of Section 3.3 of the Agreement shall
only become effective if it is approved by the Company's stockholders, which
approval shall be a majority of the total votes cast on the matter in person or
by proxy, and unless such stockholders approval is obtained, the Warrant Reset
Incentive shall be payable one hundred percent (100%) in the form of cash.
J. Xxxxx Xxxxxxxxxx, President and
Chief Executive Officer
Page 2
3. Notwithstanding anything to the contrary in the Agreement, Section
4.5 (captioned "FINANCED STOCK PURCHASE") of the Agreement, shall only become
effective if it is approved by the Company's stockholders, which approval shall
be a majority of the total votes cast on the matter in person or by proxy.
Subject to applicable laws and NASDAQ rules, it is contemplated that
the matters set forth above to be approved by the Company's stockholders may be
submitted to the stockholders as one action, and possibly with certain other
related matters.
Please evidence your agreement with the above modifications to the
Agreement by signing your name in the space provided below and returning this
letter to the Company.
Very truly yours,
Xxxxxx X. Xxxxxxx
Executive Vice President
Agreed and Accepted
as of the date first
written above
_______________________________
J. Xxxxx Xxxxxxxxxx
