EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of February 11, 1997, by and between
CHATEAU PROPERTIES, INC., a Maryland corporation (hereinafter referred to as the
"COMPANY"), and Xxxx X. XxXxxxxx (hereinafter referred to as the "EXECUTIVE").
WHEREAS, the Amended and Restated Agreement and Plan of Merger, dated
as of September 17, 1996, as amended, among ROC COMMUNITIES, INC., a Maryland
corporation ("ROC"), the Company, and R ACQUISITION SUB, INC., a Maryland
corporation and a direct subsidiary of the Company contemplates that the Company
enter into an employment agreement with the Executive;
WHEREAS, the Company wishes to offer employment to the Executive, and
the Executive wishes to accept such offer, on the terms set forth below;
Accordingly, the parties hereto agree as follows:
1. TERM. The Company hereby employs the Executive, and the
Executive hereby accepts such employment for an initial term commencing as of
the date hereof and ending on December 31, 1999, unless sooner terminated in
accordance with the provisions of Section 4 or Section 5 (the period during
which the Executive is employed hereunder being hereinafter referred to as the
"TERM").
2. DUTIES. The Executive, in his capacity as Chief Executive
Officer of the Company shall faithfully perform for the Company the duties of
said office and shall perform such other duties of an executive, managerial
or administrative nature as
shall be specified and designated from time to time by the Board of Directors
of the Company (the "BOARD") (including the performance of services for, and
serving on the Board of Directors of, any subsidiary of the Company without
any additional compensation). The Company shall use its best efforts to have
the Executive elected to the Board, and the Executive agrees to serve on the
Board during the Term without any additional compensation. The Executive
shall devote substantially all of the Executive's business time and effort to
the performance of the Executive's duties hereunder, provided that in no
event shall this sentence prohibit the Executive from performing (i) services
for ROC GP Corp. (provided that the activities of the Executive and ROC GP
Corp. do not materially increase from the level as of the date of this
Agreement) and other activities related to the business of ROC, the Company
and their affiliates and (ii) personal and charitable activities and any
other activities approved by the Board, so long as such activities do not
interfere with the Executive's duties for the Company.
3. COMPENSATION.
3.1 SALARY. The Company shall pay the Executive during the Term
a salary at the rate of $225,000 per annum (the "ANNUAL SALARY"), in accordance
with the customary payroll practices of the Company applicable to senior
executives generally. Annual Salary will increase annually on January 1 of each
year by a percentage equal to the percentage that represents the average salary
increase for all employees of the Company, or such higher amount as may be
approved by the Board, with such increase to be
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effective on the date salary increases are effective for employees of the
Company generally and, upon such increase, the increased amount shall
thereafter be deemed to be the "Annual Salary."
3.2 BONUS. The Executive will be eligible to participate in the
Chateau Communities, Inc. Annual Bonus Program (the "Bonus Plan"), the terms of
which will be established by the Executive Compensation Committee of the
Company.
3.3 BENEFITS - IN GENERAL. The Executive shall be permitted
during the Term to participate in any group life, hospitalization or disability
insurance plans, health programs, pension and profit sharing plans and similar
benefits (but not stock option or other equity-based plans, which are provided
for under Section 3.4) that may be available to other senior executives of the
Company generally, on the same terms as may be applicable to such other
executives, in each case to the extent that the Executive is eligible under the
terms of such plans or programs.
3.4 EQUITY-BASED BENEFITS - IN GENERAL. The Executive will be
eligible to participate in the Company's 1997 Equity Compensation Plan which as
of the date hereof is in the form attached hereto as Exhibit A.
3.5 VACATION. The Executive shall be entitled to vacation of 20
days per year.
3.6 AUTOMOBILE. The Company will provide the Executive a
monthly allowance of $1,000 for the use of an automobile. At the option of the
Company, in lieu of providing such allowance, the Company will provide the
Executive with an automobile of suitable standard to the Executive's position.
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3.7 DISABILITY BENEFITS AND LIFE INSURANCE. The Executive shall
be entitled to long-term disability benefits and life insurance benefits from
the Company each of which shall be reasonably commensurate with benefits
provided to similarly situated senior executives of comparable companies.
3.8 EXPENSES. The Company shall pay or reimburse the Executive
for all ordinary and reasonable out-of-pocket expenses actually incurred (and,
in the case of reimbursement, paid) by the Executive during the Term in the
performance of the Executive's services under this Agreement; provided that the
Executive submits such expenses in accordance with the policies applicable to
senior executives of the Company generally.
4. TERMINATION UPON DEATH OR DISABILITY. If the Executive dies
during the Term, the obligations of the Company to or with respect to the
Executive shall terminate in their entirety except as otherwise provided under
this Section 4. If the Executive becomes eligible for disability benefits under
the Company's long-term disability plans and arrangements (or, if none apply,
would have been so eligible under the most recent plan or arrangement), the
Company shall have the right, to the extent permitted by law, to terminate the
employment of the Executive upon notice in writing to the Executive; provided
that the Company will have no right to terminate the Executive's employment if,
in the opinion of a qualified physician reasonably acceptable to the Company, it
is reasonably certain that the Executive will be able to resume the Executive's
duties on a regular full-time basis within 30 days of the date the Executive
receives notice of such
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termination. Upon death or other termination of employment by virtue of
disability, (i) the Executive (or the Executive's estate or beneficiaries in
the case of the death of the Executive) shall have no right to receive any
compensation or benefit hereunder on and after the effective date of the
termination of employment other than Annual Salary and other benefits (but
excluding any bonuses except as provided in the Bonus Plan) earned and
accrued under this Agreement prior to the date of termination (and
reimbursement under this Agreement for expenses incurred prior to the date of
termination); and (ii) this Agreement shall otherwise terminate upon such
death or other termination of employment and there shall be no further rights
with respect to the Executive hereunder (except as provided in Section 7.14).
5. CERTAIN TERMINATIONS OF EMPLOYMENT.
5.1 TERMINATION FOR CAUSE; TERMINATION OF EMPLOYMENT BY THE
EXECUTIVE WITHOUT GOOD REASON.
(a) For purposes of this Agreement, "CAUSE" shall mean
(i) the Executive's conviction for (or pleading nolo contendere
to) any felony, or a misdemeanor involving moral turpitude;
(ii) the Executive's commission of an act of fraud, theft or
dishonesty related to the performance of the Executive's duties
hereunder;
(iii) the willful and continuing failure or habitual neglect by
the Executive to perform the Executive's duties hereunder after
reasonable notice and affording the Executive a reasonable
opportunity to cease such failure or neglect;
(iv) any material violation by the Executive of the covenants
contained in Section 6; or
(v) the Executive's willful and continuing material breach of
this Agreement after reasonable
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notice and affording the Executive a reasonable opportunity to
cure such breach;
provided that Cause shall in no event be deemed to exist except upon a finding
reflected in a resolution of a majority of the directors of the Board, excluding
the Executive for these purposes, at a meeting to which the Executive (and the
Executive's counsel) shall be invited upon proper notice.
(b) For purposes of this Agreement, "GOOD REASON" shall mean, unless
otherwise consented to by the Executive,
(i) the material reduction of the Executive's authority, duties
and responsibilities, or the assignment to the Executive of
duties materially inconsistent with the Executive's position or
positions with the Company and its subsidiaries;
(ii) a reduction in Annual Salary of the Executive or the failure
to provide for the increases in Annual Salary required by this
Agreement;
(iii) the failure by the Company to obtain an agreement in form
and substance reasonably satisfactory to the Executive from any
successor to the business of the Company to assume and agree to
perform this Agreement;
(iv) the failure of the Executive to be nominated and recommended
by the Board for election by the stockholders; or
(v) the Company's material and willful breach of this Agreement.
Notwithstanding the foregoing, if there exists (without regard to this sentence)
an event or condition that constitutes Good Reason under clause (i), (ii) or (v)
above, the Company shall have 30 days from the date such notice is given to cure
such event or condition and, if the Company does so, such event or condition
shall not constitute Good Reason hereunder.
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(c) The Company may terminate the Executive's employment hereunder for
Cause. If the Company terminates the Executive for Cause (other than in the
circumstances set forth in Section 5.3), (i) the Executive shall have no right
to receive any compensation or benefit hereunder on and after the effective date
of the termination of employment other than Annual Salary and other benefits
(but excluding any bonuses except as provided in the Bonus Plan) earned and
accrued under this Agreement prior to the effective date of the termination of
employment (and reimbursement under this Agreement for expenses incurred prior
to the effective date of the termination of employment); and (ii) this Agreement
shall otherwise terminate upon such termination of employment and the Executive
shall have no further rights hereunder (except as provided in Section 7.14).
(d) The Executive may terminate his employment without Good Reason.
If the Executive terminates the Executive's employment with the Company
without Good Reason (other than in the circumstances set forth in Section
5.3), and such termination is not covered by Section 5.2 by virtue of the
last sentence thereof, (i) the Executive shall have no right to receive any
compensation or benefit hereunder on and after the effective date of the
termination of employment other than Annual Salary and other benefits (but
excluding any bonuses except as provided in the Bonus Plan or in clause (ii)
below) earned and accrued under this Agreement prior to the effective date of
the termination of employment (and reimbursement under this Agreement for
expenses incurred prior to the effective date of the termination of
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employment); (ii) the Executive shall be entitled to receive (A) a cash
payment equal to the sum of (x) the Executive's Annual Salary (as in effect
on the effective date of such termination) payable no later than 30 days
after such termination and (y) the "TERMINATION BONUS," which shall be the
average of the two previous annual bonuses received by the Executive as
provided for in the Bonus Plan, or, in the event the Executive has received
only one annual bonus pursuant to the Bonus Plan at the time of such
termination, the Termination Bonus shall be equal to the amount of such
annual bonus, or, in the event the Executive has not received any annual
bonuses pursuant to the Bonus Plan at the time of such termination, the
Termination Bonus shall be equal to the annual bonus the Executive would have
received under the Bonus Plan if the Executive would have remained employed
through the period required to be entitled to receive the annual bonus,
payable no later than 30 days after such termination (or, if later, as soon
as practicable, but in no event more than 30 days after, the amount of the
Termination Bonus is known) and (B) for a period of one year after
termination of employment such continuing health benefits (including any
medical, vision or dental benefits), under the Company's health plans and
programs applicable to senior executives of the Company generally as the
Executive would have received under this Agreement (and at such costs to the
Executive) as would have applied in the absence of such termination (but not
taking into account any post-termination increases in Annual Salary that may
otherwise have occurred without regard to such termination and that may have
favorably affected such benefits); it being expressly understood
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and agreed that nothing in this clause (ii) shall restrict the ability of the
Company to amend or terminate such plans and programs from time to time in
its sole discretion; provided, however, that the Company shall in no event be
required to provide such coverage after such time as the Executive becomes
entitled to receive health benefits from another employer or recipient of the
Executive's services (and provided, further, that such entitlement shall be
determined without regard to any individual waivers or other arrangements);
and (iii) this Agreement shall otherwise terminate upon such termination of
employment and the Executive shall have no further rights hereunder (except
as provided in Section 7.14).
5.2 TERMINATION WITHOUT CAUSE; TERMINATION FOR GOOD REASON. The
Company may terminate the Executive's employment at any time for any reason
or no reason and the Executive may terminate the Executive's employment with
the Company for Good Reason. If the Company or the Executive terminates the
Executive's employment, and such termination is not described in Section 4 or
Section 5.1, (other than in the circumstances set forth in Section 5.3), (i)
the Executive shall have no right to receive any compensation or benefit
hereunder on and after the effective date of the termination of employment
other than Annual Salary and other benefits (but excluding any bonuses except
as provided in the Bonus Plan or in clause (ii) below) earned and accrued
under this Agreement prior to the effective date of the termination of
employment (and reimbursement under this Agreement for expenses incurred
prior to the effective date of the termination of
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employment); (ii) the Executive shall receive (A) a cash payment equal to two
times the sum of (x) the Executive's Annual Salary (as in effect on the
effective date of such termination) payable no later than 30 days after such
termination and (y) the Termination Bonus payable no later than 30 days after
such termination (or, if later, as soon as practicable, but in no event more
than 30 days after, the amount of the Termination Bonus is known) and (B) for
a period of two years after termination of employment such continuing health
benefits (including any medical, vision or dental benefits), under the
Company's health plans and programs applicable to senior executives of the
Company generally as the Executive would have received under this Agreement
(and at such costs to the Executive) as would have applied in the absence of
such termination (but not taking into account any post-termination increases
in Annual Salary that may otherwise have occurred without regard to such
termination and that may have favorably affected such benefits); it being
expressly understood and agreed that nothing in this clause (ii) shall
restrict the ability of the Company to amend or terminate such plans and
programs from time to time in its sole discretion; provided, however, that
the Company shall in no event be required to provide such coverage after such
time as the Executive becomes entitled to receive health benefits from
another employer or recipient of the Executive's services (and provided,
further, that such entitlement shall be determined without regard to any
individual waivers or other arrangements); (iii) all outstanding unvested
options and restricted stock held by the Executive shall vest and all options
shall remain exercisable for two years (or, if
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longer, the balance of the regular term of the options); and (iv) this
Agreement shall otherwise terminate upon such termination of employment and
the Executive shall have no further rights hereunder (except as provided in
Section 7.14). For purposes of this Section 5, if the Executive's employment
is not terminated under Section 4 or this Section 5 before the Term would
otherwise expire under Section 1, then a termination of employment at the
expiration of the Term, which termination is not covered by Section 4 or 5.3,
shall be covered under this Section 5.2 rather than under Section 5.1(c);
provided, however, that, in such event, "two times" in clause (ii)(A) above
shall be replaced with "one and one-half times" and "two years" in clause
(ii)(B) above shall be replaced with "18 months".
5.3 TERMINATION AFTER CHANGE OF CONTROL.
(a) For purposes of this Agreement, "Change of Control" means the
occurrence of one of the following:
(i) a "person" or "group" (within the meaning of sections 13(d)
and 14(d) of the Securities and Exchange Act of 1934 (the
"EXCHANGE ACT")) becomes the "beneficial owner" (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of
the Company (including options, warrants, rights and convertible
and exchangeable securities) representing 50% or more of the
combined voting power of the Company's then outstanding
securities in any one or more transactions; provided, however,
that purchases by employee benefit plans of the Company and by
the Company or its affiliates shall be disregarded;
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the operating assets of the Company;
(iii) the execution and delivery of a definitive agreement by the
Company that provides for a merger or consolidation, or a
transaction having a similar
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effect (unless such merger, consolidation or similar
transaction is with a subsidiary of the Company or with
another company, a majority of whose outstanding capital stock
is owned by the same persons or entities who own a majority of
the Company's outstanding common stock (the "Common Stock") at
such time), where (A) the Company is not the surviving
corporation and a majority of the Common Stock of the Company
is no longer held by stockholders of the Company immediately
prior to the transaction, (B) the majority of the Common Stock
of the Company is no longer held by the stockholders of the
Company immediately prior to the transaction, or (C) the
Company's Common Stock is converted into cash, securities or
other property (other than the common stock of a company into
which the Company is merged); provided, however, that, in the
event that the contemplated merger, consolidation or similar
transaction is not consummated, then any rights that may arise
under this Section 5.3(a) by virtue of such Change of Control
shall cease to apply;
(iv) at a time when the Common Stock is registered under Section
12 of the Exchange Act, a person other than the Company makes a
tender or exchange offer for 50% or more of the Common Stock
pursuant to which purchases of any amount of Common Stock are
made; or
(v) a majority of the members of the Board are not persons who
(A) had been directors of the Company for at least the preceding
24 consecutive months or (B) when they initially were elected to
the Board, (I) were nominated (if they were elected by the
stockholders) or elected (if they were elected by the directors)
with the affirmative vote of two-thirds of the directors who were
Continuing Directors (as defined below) at the time of the
nomination or election by the Board and (II) were not elected as
a result of an actual or threatened solicitation of proxies or
consents by a person other than the Board or an agreement
intended to avoid or settle such a proxy solicitation (the
directors described in clauses (A) and (B) being "CONTINUING
DIRECTORS").
Notwithstanding the foregoing, a "Change of Control" shall not include an
offering of any class of shares of common stock of the Company or any of its
affiliates under the Securities Act of 1933, as amended.
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(b) Notwithstanding Section 5.1 or 5.2, in the event of a termination
of the Executive by the Company or the Executive for any reason other than as
described in Section 4 within the one-year period following a Change of Control,
(i) the Executive shall have no right to receive any compensation or benefit
hereunder on and after the effective date of the termination of employment other
than Annual Salary and other benefits (but excluding any bonuses except as
provided in the Bonus Plan or in clause (ii) below) earned and accrued under
this Agreement prior to the effective date of the termination of employment (and
reimbursement under this Agreement for expenses incurred prior to the effective
date of the termination of employment); (ii) the Executive shall receive (A) a
cash payment equal to three times the sum of (x) the Executive's Annual Salary
(as in effect on the effective date of such termination) payable no later than
30 days after such termination and (y) the Termination Bonus payable no later
than 30 days after such termination (or, if later, as soon as practicable, but
in no event more than 30 days after, the amount of the Termination Bonus is
known) and (B) for a period of three years after termination of employment (x)
such continuing health benefits (including any medical, vision or dental
benefits), under the Company's health plans and programs applicable to senior
executives of the Company generally as the Executive would have received under
this Agreement (and at such costs to the Executive) as would have applied in the
absence of such termination (but not taking into account any post-termination
increases in Annual Salary that may otherwise have occurred without regard to
such termination and that may have
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favorably affected such benefits); it being expressly understood and agreed
that nothing in this clause (ii) shall restrict the ability of the Company to
amend or terminate such plans and programs from time to time in its sole
discretion; provided, however, that the Company shall in no event be required
to provide such coverage after such time as the Executive becomes entitled to
receive health benefits from another employer or recipient of the Executive's
services (and provided, further, that such entitlement shall be determined
without regard to any individual waivers or other arrangements) and (y) an
amount reasonably equivalent economically to the pension benefits the
Executive would have received if the Executive remained employed for such
three-year period; (iii) all outstanding unvested options and restricted
stock held by the Executive shall vest and all options shall remain
exercisable for two years (or, if longer, the balance of the regular term of
the options); and (iv) this Agreement shall otherwise terminate upon such
termination of employment and the Executive shall have no further rights
hereunder (except as provided in Section 7.14).
6. COVENANTS OF THE EXECUTIVE.
6.1 COVENANT AGAINST COMPETITION; OTHER COVENANTS. The Executive
acknowledges that (i) the principal business of the Company is the owning,
acquiring, developing or operating of manufactured housing communities (such
businesses, and any and all other businesses that after the date hereof, and
from time to time during the Term, become material and substantial with respect
to the Company's then-overall business, herein being collectively
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referred to as the "BUSINESS"); (ii) the Company knows of a limited number of
persons who have developed the Company's Business; (iii) the Company's
Business is, in part, national in scope; (iv) the Executive's work for the
Company and its subsidiaries (and the predecessors of either) has given and
will continue to give the Executive access to the confidential affairs and
proprietary information of the Company; (v) the covenants and agreements of
the Executive contained in this Section 6 are essential to the business and
goodwill of the Company; and (vi) the Company would not have entered into
this Agreement but for the covenants and agreements set forth in this Section
6. In light of the foregoing, during the Term and for a period of one year
thereafter (and, as to Section 6.1(b) and (d), at any time during and after
the Executive's employment with the Company and its subsidiaries (and the
predecessors of either)):
(a) Except for such affiliation with ROC GP Corp. and its
affiliates (provided that the activities of the Executive and ROC GP Corp. do
not materially increase from the level as of the date of this Agreement), the
Executive shall not, directly or indirectly, own, manage, control or participate
in the ownership, management, or control of, or be employed or engaged by or
otherwise affiliated or associated as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business of the Company
in any county of any state in which the Company owns or
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leases manufactured home communities. In the case of a termination by the
Company without Cause or by the Executive for Good Reason, the preceding
covenant shall expire on the date of termination; provided, however, that,
notwithstanding the foregoing, the Executive may invest in securities of any
entity, solely for investment purposes and without participating in the
business thereof, if (i) such securities are traded on any national
securities exchange or the National Association of Securities Dealers, Inc.
Automated Quotation System, (ii) the Executive is not a controlling person
of, or a member of a group which controls, such entity and (iii) the
Executive does not, directly or indirectly, own one percent or more of any
class of securities of such entity; provided that this Section 6.1(a) shall
not apply in the event of and effective upon a Change of Control.
(b) The Executive shall keep secret and retain in strictest
confidence, and shall not use for his benefit or the benefit of others, except
in connection with the business and affairs of the Company and its affiliates,
all confidential matters relating to the Company's Business and the business of
any of its affiliates and to the Company and any of its affiliates, learned by
the Executive heretofore or hereafter directly or indirectly from the Company or
any of its subsidiaries (or any predecessor of either) (the "CONFIDENTIAL
COMPANY INFORMATION"), including, without limitation, information with respect
to the Business and any aspect thereof, profit or loss figures, and the
Company's or its affiliates' (or any of their predecessors') properties, and
shall not disclose such Confidential Company Information to anyone
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outside of the Company except with the Company's express written consent and
except for Confidential Company Information which (i) at the time of receipt
or thereafter becomes publicly known through no wrongful act of the
Executive, (ii) is clearly obtainable in the public domain, (iii) was not
acquired by the Executive in connection with the Executive's employment or
affiliation with the Company, (iv) was not acquired by the Executive from the
Company or its representatives, or (v) is required to be disclosed by rule of
law or by order of a court or governmental body or agency.
(c) The Executive shall not, without the Company's prior
written consent, directly or indirectly, (i) knowingly solicit or encourage to
leave the employment or other service of the Company or any of its affiliates,
any employee thereof or hire (on behalf of the Executive) or any other person or
entity) any employee who has left the employment or other service of the Company
or any of its affiliates (or any predecessor of either) within one year of the
termination of such employee's or independent contractor's employment or other
service with the Company and its affiliates, or (ii) whether for the Executive's
own account or for the account of any other person, firm, corporation or other
business organization, intentionally interfere with the Company's or any of its
affiliates' relationship with, or endeavor to entice away from the Company or
any of its affiliates, any person who during the Executive's employment with the
Company and its affiliates (or the predecessors of either) is or was a customer
or client of the Company or any of its affiliates (or any
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predecessor of either); provided that this Section 6.1(c) shall not apply in
the event of and effective upon a Change of Control.
(d) All memoranda, notes, lists, records, property and any
other tangible product and documents (and all copies thereof) made, produced or
compiled by the Executive or made available to the Executive concerning the
Business of the Company and its affiliates shall be the Company's property and
shall be delivered to the Company at any time on request.
6.2 RIGHTS AND REMEDIES UPON BREACH. The Executive acknowledges and
agrees that any breach by him of any of the provisions of Section 6.1 (the
"RESTRICTIVE COVENANTS") would result in irreparable injury and damage for which
money damages would not provide an adequate remedy. Therefore, if the Executive
breaches, or threatens to commit a breach of, any of the Restrictive Covenants,
the Company and its affiliates shall have the right and remedy to have the
Restrictive Covenants specifically enforced (without posting bond and without
the need to prove damages) by any court having equity jurisdiction, including,
without limitation, the right to an entry against the Executive of restraining
orders and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such
covenants. This right and remedy shall be in addition to, and not in lieu of,
any other rights and remedies available to the Company and its affiliates under
law or in equity (including, without limitation, the recovery of damages). The
existence of any claim or cause of action by the Executive, whether predicated
on this Agreement or otherwise, shall
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not constitute a defense to the enforcement of the Restrictive Covenants.
7. OTHER PROVISIONS.
7.1 SEVERABILITY. The Executive acknowledges and agrees that
(i) the Executive has had an opportunity to seek advice of counsel in connection
with this Agreement and (ii) the Restrictive Covenants are reasonable in
geographical and temporal scope and in all other respects. If it is determined
that any of the provisions of this Agreement, including, without limitation, any
of the Restrictive Covenants, or any part thereof, is invalid or unenforceable,
the remainder of the provisions of this Agreement shall not thereby be affected
and shall be given full effect, without regard to the invalid portions.
7.2 DURATION AND SCOPE OF COVENANTS. If any court or other
decision-maker of competent jurisdiction determines that any of the Executive's
covenants contained in this Agreement, including, without limitation, any of the
Restrictive Covenants, or any part thereof, are unenforceable because of the
duration or geographical scope of such provision, then, after such determination
has become final and unappealable, the duration or scope of such provision, as
the case may be, shall be reduced so that such provision becomes enforceable
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
7.3 ENFORCEABILITY; JURISDICTIONS. The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
the Restrictive Covenants. If the
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courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly unenforceable by reason of breadth of scope or otherwise it
is the intention of the Company and the Executive that such determination not
bar or in any way affect the Company's right, or the right of any of its
affiliates, to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such Restrictive Covenants, as
to breaches of such Restrictive Covenants in such other respective
jurisdictions, such Restrictive Covenants as they relate to each
jurisdiction's being, for this purpose, severable, diverse and independent
covenants, subject, where appropriate, to the doctrine of RES JUDICATA. Any
controversy or claim arising out of or relating to this Agreement or the
breach of this Agreement that is not resolved by the Executive and the
Company (or its affiliates, where applicable), other than those arising under
Section 6, to the extent necessary for the Company (or its affiliates, where
applicable) to avail itself of the rights and remedies provided under Section
6.2, shall be submitted to arbitration in Denver, Colorado in accordance with
Colorado law and the procedures of the American Arbitration Association. The
determination of the arbitrator(s) shall be conclusive and binding on the
Company (or its affiliates, where applicable) and the Executive and judgment
may be entered on the arbitrator(s)' award in any court having jurisdiction.
7.4 ATTORNEYS' FEES. In the event of any legal proceeding
(including an arbitration proceeding) relating to this Agreement or any term or
provision thereof in which the Executive
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is the prevailing party, the Company shall be responsible to pay or reimburse
the Executive for all reasonable attorneys' fees incurred by the Executive in
connection with such proceeding.
7.5 NOTICES. Any notice or other communication required or
permitted 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. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United
States mails as follows:
(i) If to the Company, to:
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(ii) If to the Executive, to:
Xxxx X. XxXxxxxx
00000 Xxxxxx Xxxx 00
Xxxxxxxxx, Xxxxxxxx 00000
with a copy in either case to:
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
and
Timmis & Xxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, III, Esq.
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Any such person may by notice given in accordance with this Section to the other
parties hereto designate another address or person for receipt by such person of
notices hereunder.
7.6 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with the Company or its
subsidiaries (or any predecessor of either).
7.7 WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms 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 such right, power
or privilege nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise of any
other such right, power or privilege.
7.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
7.9 ASSIGNMENT. This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive; any purported
assignment by the Executive in violation hereof shall be null and void. In the
event of any sale, transfer or other disposition of all or substantially all of
22
the Company's assets or business, whether by merger, consolidation or otherwise,
the Company may assign this Agreement and its rights hereunder.
7.10 WITHHOLDING. The Company shall be entitled to withhold from
any payments or deemed payments any amount of withholding required by law. No
other taxes, fees, impositions, duties or other charges or offsets of any kind
shall be deducted or withheld from amounts payable hereunder, unless otherwise
required by law.
7.11 NO DUTY TO MITIGATE. The Executive shall not be required
to mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise, nor will any payments
hereunder be subject to offset in the event the Executive does mitigate.
7.12 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors, permitted
assigns, heirs, executors and legal representatives.
7.13 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts together shall constitute one and
the same instrument. Each counterpart may consist of two copies hereof each
signed by one of the parties hereto.
7.14 SURVIVAL. Anything contained in this Agreement to the
contrary notwithstanding, the provisions of Sections 6, 7.3, 7.4 and 7.10 and
the other provisions of this Section 7 (to the
23
extent necessary to effectuate the survival of Sections 6, 7.3, 7.4 and 7.10)
shall survive termination of this Agreement and any termination of the
Executive's employment hereunder.
7.15 EXISTING AGREEMENTS. Executive represents to the Company
that the Executive is not subject or a party to any employment or consulting
agreement, non-competition covenant or other agreement, covenant or
understanding which might prohibit him from executing this Agreement or limit
the Executive's ability to fulfill the Executive's responsibilities hereunder.
7.16 HEADINGS. The headings in this Agreement are for reference
only and shall not affect the interpretation of this Agreement.
7.17 PARACHUTE PROVISIONS. If any amount payable to or other
benefit receivable by the Executive pursuant to this Agreement is deemed to
constitute a Parachute Payment (as defined below), alone or when added to any
other amount payable or paid to or other benefit receivable or received by
the Executive which is deemed to constitute a Parachute Payment (whether or
not under an existing plan, arrangement or other agreement), and would result
in the imposition on the Executive of an excise tax under Section 4999 of the
Internal Revenue Code, then, in addition to any other benefits to which the
Executive is entitled under this Agreement, the Executive shall be paid by
the Company an amount in cash equal to the sum of the excise taxes payable by
the Executive by reason of receiving Parachute Payments plus the amount
necessary to put the Executive in the same after-tax position (taking into
account any and all applicable federal, state and local excise, income or
24
other taxes at the highest applicable rates on such Parachute Payments and on
any payments under this Section 7.17) and if no excise taxes had been imposed
with respect to Parachute Payments. The amount of any payment under this
Section 7.17 shall be computed by a certified public accounting firm mutually
and reasonably acceptable to the Executive and the Company, the computation
expenses of which shall be paid by the Company. "Parachute
25
Payment" shall mean any payment deemed to constitute a "parachute payment" as
defined in Section 280G of the Internal Revenue Code.
IN WITNESS WHEREOF, the parties hereto have signed their names as of
the day and year first above written.
Chateau Properties, Inc.
By: /s/Xxxx X. Xxxx
----------------------
its Chairman
/s/Xxxx X. XxXxxxxx
----------------------
Xxxx X. XxXxxxxx
26
