Exhibit 10.42
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of January 1,
2004 (the "Effective Date"), by and between Technical Olympic USA, Inc., a
Delaware corporation (the "Company") and Xxxxx Xxxxxxxxxx, an individual (the
"Executive").
BACKGROUND
TOUSA Homes, Inc., a Florida corporation f/k/a Xxxxx Homes, Inc.
("TOUSA Homes"), is a wholly-owned subsidiary of the Company. TOUSA Homes and
the Executive were parties to an employment agreement that expired as of
December 31, 2003. The Company and the Executive now desire to enter into this
Agreement setting forth the terms and conditions of the continued employment
relationship between the Executive and the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises, covenants and
agreements set forth below, and intending to be legally bound hereby, it is
hereby agreed as follows:
1. DEFINITIONS. For the purposes of this Agreement, capitalized terms
shall have the meanings defined herein or on Exhibit A attached hereto unless
the context otherwise requires.
2. EMPLOYMENT TERM, DUTIES.
2.1 EMPLOYMENT TERM. The Company hereby employs the Executive, and the
Executive hereby accepts employment by the Company, upon the terms and
conditions set forth herein for an initial period to begin on the Effective Date
and to end on December 31, 2004, unless terminated earlier in accordance with
the provisions of Section 4 (the "Employment Period"); provided, however, that
the Employment Period shall automatically be extended for additional one (1)
year periods at the end of each then-current Employment Period, unless either
the Company or the Executive delivers written notice to the other of the
non-extension of the Employment Period at least three (3) months prior to the
end of the then-current Employment Period.
2.2 DUTIES.
(a) The Executive will serve as Executive Vice President of
TOUSA Homes. In this capacity, Executive will act as president of the South
Florida Division of TOUSA Homes, will assume certain executive and corporate
management responsibilities for the Company, and will have such other duties and
responsibilities as are reasonably consistent with such position or as may be
assigned or delegated to the Executive from time to time by the Board of
Directors, the Chief Executive Officer of the Company, or a senior executive of
the Company identified by the Chief Executive Officer to the Executive. The
Executive will devote his full business time, attention, skill, and energy
exclusively to the business of the Company, will use his best efforts to promote
the success of the Company's business and will cooperate fully with the senior
management of the Company and the Board of Directors in the advancement of the
best interests of the Company.
(b) Notwithstanding the provisions of Section 2.2(a) hereof,
the Executive may engage in the following activities during the Employment
Period: (i) serve on such corporate, civic, religious, educational and/or
charitable boards or committees that have been disclosed to, and approved by,
the Board of Directors in writing; (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions without receiving any
compensation other than reimbursement of expenses,
1
nominal stipends or similar forms of compensation; and (iii) manage his personal
investments, provided that such investments do not conflict with the Executive's
duties and responsibilities under this Agreement. If the Executive is appointed
or elected an officer or director of the Company or any Affiliate, the Executive
will fulfill his duties as such officer or director without additional
compensation; provided that such appointment may not be made without the
Executive's prior consent. Upon termination of this Agreement for any reason,
the Executive hereby automatically resigns as of such date as an officer and
director of the Company and each Affiliate of which he is an officer or
director, if any.
2.3 LOCATION. The Executive's primary place of employment hereunder
shall be at the TOUSA Homes office located in Boca Raton, Florida; provided,
however, that the Executive shall travel as reasonably necessary to perform his
obligations and duties to the Company.
3. COMPENSATION AND BENEFITS. The compensation and benefits payable and
provided to the Executive under this Agreement shall constitute the full
consideration to be paid to the Executive for all services to be rendered by the
Executive to the Company and its Affiliates in all capacities.
3.1 BASE SALARY. Commencing on the Effective Date, the Executive will
be paid an annual salary of Four Hundred and Forty Five Thousand Dollars
($445,000) (the "Base Salary"), which will be payable in equal periodic
installments according to the Company's customary payroll practices. In the
event the Employment Period is extended in accordance with Section 2.1 of this
Agreement, the parties will agree to any adjustments to the Base Salary.
3.2 BENEFITS. The Executive (and the Executive's spouse and dependents,
where applicable) shall be permitted to participate in such 401(k) plan (or
similar qualified plan) and any welfare benefit plan, program or fringe benefit
made available to, and on the terms at least as favorable to, other similarly
situated employees of the Company or its Affiliates, that may be in effect from
time to time, subject to the Executive (and the Executive's spouse and
dependents, where applicable) meeting the eligibility requirements under the
terms of each of those plans (collectively, the "Benefits"). Nothing herein
shall prevent the Company from modifying or terminating any employee benefit
plan in the Company's sole discretion, so long as such modification or
termination equally affects all of the Company's similarly situated employees.
3.3 ANNUAL BONUS. So long as the Executive has been employed by the
Company throughout the Employment Period, the Executive shall be eligible to
receive a cash bonus ("Bonus") substantially equivalent to the opportunity set
forth in Exhibit B attached hereto, as the same may be amended from time to time
by the parties.
3.4 STOCK OPTION PLAN PARTICIPATION. The Company may adopt a policy for
the granting of stock options to certain officers and senior managers of the
Company. In the event that such a policy is adopted, contingent upon specific
approval of the Compensation and Benefits Committee and the Board of Directors,
the Executive may be granted stock options on terms and conditions appropriate
to his position and consistent with other similarly situated employees.
3.5 BUSINESS EXPENSES. In accordance with the rules and policies that
the Company may establish from time to time for its executives, the Company
shall reimburse the Executive for business expenses reasonably incurred by him
in the performance of his duties hereunder. Requests for reimbursement must be
accompanied by appropriate documentation.
3.6 VACATION. The Executive shall be entitled to four (4) weeks
vacation per calendar year (prorated for less than a full year). Unused vacation
time not to exceed an aggregate of two (2) weeks for
2
all prior years may be accumulated or carried over from year to year.
Notwithstanding, the Executive shall not be entitled to any compensation for
unused vacation time except as provided in Section 4.
3.7 CAR ALLOWANCE. During the Employment Period, the Executive shall be
provided an automobile for his use and the Company shall pay the costs relating
to the maintenance and operation of such automobile in accordance with the
Company's customary practices and policies. Such automobile shall be suitable
for Executive's use and its quality and standard shall not be less than his
existing automobile.
3.8 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistants, as
provided at any time with respect to other similarly situated employees of the
Company and its Affiliates and/or as reasonably necessary to perform the
Executive's duties and obligations as set forth herein.
4. TERMINATION.
4.1 DEATH; DISABILITY. This Agreement will terminate automatically upon
the death or Disability of the Executive.
4.2 TERMINATION NOTICE. Any termination of the Executive's employment
other than a termination pursuant to Section 4.1 hereof shall be by written
notice to the other party, indicating the specific termination provision in this
Agreement relied upon, if any, and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for the termination of the
Executive's employment under the provision so indicated. The date of the
Executive's termination of employment shall be specified in such notice;
provided, however, that such date may not be earlier than any applicable cure
periods as set forth herein. If a termination is being effected by the
Executive, such date shall not be less than three (3) months from the date the
written notice is given to the Company (the "Required Notice"). Failure to
provide the Required Notice shall be deemed a breach of this Agreement by the
Executive for which the Executive will be liable to the Company as provided
herein and for any damages caused by such breach.
4.3 TERMINATION PAY. Upon termination of the Executive's employment,
the Company will be obligated to pay or provide the Executive or the Executive's
estate, as the case may be, only such compensation and Benefits as are provided
in this Section 4.3 and, if applicable, in Section 5.3 hereof.
(a) TERMINATION BY THE COMPANY FOR CAUSE; RESIGNATION OF THE
EXECUTIVE WITHOUT GOOD REASON OR REQUIRED Notice. If (i) the Company terminates
the Executive's employment for Cause; (ii) the Executive terminates his
employment for any reason other than Good Reason; or (iii) the Executive
terminates his employment for any reason without the Required Notice, the
Executive shall be entitled to receive the Accrued Obligations from the Company,
payable via wire transfer to an account designated by the Executive within
thirty (30) Business Days after the date of termination. Except as specifically
provided herein, the Executive shall not be entitled to any other payments or
Benefits pursuant to this Agreement.
(b) TERMINATION DUE TO DISABILITY. If the Executive's
employment is terminated due to Disability, the Executive shall be entitled to
receive from the Company the sum of the following, payable via wire transfer to
an account designated by the Executive's legal representative within thirty (30)
Business Days after the date of termination: (i) the Accrued Obligations and
(ii) the Pro-Rata Bonus.
3
(c) TERMINATION UPON DEATH. If this Agreement is terminated
because of the Executive's death, the Executive's estate shall be entitled to
receive from the Company the sum of the following, payable via wire transfer to
an account designated by the Executive's legal representative within thirty (30)
Business Days after the date of termination: (i) the Accrued Obligations and
(ii) the Pro-Rata Bonus.
(d) TERMINATION BY THE EXECUTIVE DUE TO GOOD REASON OR BY THE
COMPANY WITHOUT CAUSE. If the Executive's employment is terminated by the
Company without Cause or by the Executive for Good Reason, the Executive shall
be entitled to receive from the Company the following, payable via wire transfer
to an account designated by the Executive within thirty (30) Business Days after
the date of termination: (i) the Termination Payment and (ii) if the Executive
timely elects continuation coverage under the Company's group health plan, an
amount equal to the monthly premium charge for such coverage, for the lesser of
the then remaining term of the Employment Period or the period of such continued
health coverage, at the active employee premium rate for similar coverage.
4.4 RELEASE AND WAIVER. Notwithstanding anything in Section 4.3 to the
contrary, the Executive shall not be entitled to any payment or Benefit pursuant
to Section 4.3, except for Accrued Obligations as required by law, unless the
Executive has delivered to the Company an executed form of general release, in a
form reasonably acceptable to the Company, that releases the Company and its
Affiliates, and all their respective officers, directors, employees and agents
from any and all claims of any kind that the Executive may have arising out of
the Executive's employment with the Company or the termination of such
employment, but excluding any claims arising under this Agreement, and such
release has become irrevocable.
4.5 NO MITIGATION; NO OFFSET. In the event of any termination of the
Executive's employment under this Agreement, the Executive shall be under no
obligation to seek other employment, and there shall be no offset against
amounts due under this Agreement on account of any remuneration attributable to
any subsequent employment that the Executive may obtain. The Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company or any Affiliate may have against the Executive or others.
4.6 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 4.6) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest or penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 4.6(a), if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that
could be paid to the Executive such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.
4
(b) Subject to the provisions of Section 4.6(c) hereof, all
determinations required to be made under this Section 4.6, including whether and
when a Gross-Up payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Company's independent certified accountant or such other certified public
accounting firm as may be designated by the Company (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Executive within fifteen (15) Business Days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is required by
the Company. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined pursuant to this Section
4.6, shall be paid by the Company to the Executive within five (5) Business Days
of the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 4.6(c) hereof and the Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten (10) Business Days after the
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation of the foregoing provisions of
this Section 4.6(c), the Company shall control all proceedings taken in
connection with such contest and at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and
5
xxx for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such payment to the Executive, the Company
shall advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statue of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 4.6(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company complying with the requirements of Section 4.6(c)
hereof) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 4.6(c) hereof, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
5. NON-COMPETITION AND NON-INTERFERENCE.
5.1 ACKNOWLEDGEMENTS. The Executive acknowledges that (a) the services
to be performed by him under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character and (b) the provisions of this Section
5 are reasonable and necessary to protect the Confidential Information, goodwill
and other business interests of the Company.
5.2 COVENANTS OF THE EXECUTIVE. The Executive covenants that he will
not, directly or indirectly:
(a) during the Non-Compete Period, without the express prior
written consent of the Board of Directors, as owner, officer, director,
employee, stockholder, principal, consultant, agent, lender, guarantor,
cosigner, investor or trustee of any corporation, partnership, proprietorship,
joint venture, association or any other entity of any nature, engage, directly
or indirectly, in the Business in (i) in any county in any state, or any county
contiguous with a county, in which the Company or any of its Affiliates is
conducting Business activities or has conducted Business activities in the prior
twelve (12) months, and (ii) any county in which the Company of any of its
Affiliates is conducting other business; provided, however, that the Executive
may purchase or otherwise acquire for passive investment up to three percent
(3%) of any class of securities of any such enterprise under Section 12(g) of
the Securities Exchange Act of 1934;
(b) whether for the Executive's own account or for the account
of any other person at any time during his employment with the Company or its
Affiliates (except for the account of the Company and its Affiliates) and the
Non-Compete Period, solicit Business of the same or similar type being carried
on by the Company or its Affiliates, whether or not the Executive had personal
contact with such person or entity during the Executive's employment with the
Company;
6
(c) whether for the Executive's own account or the account of
any other person and at any time during his employment with the Company or its
Affiliates and the Non-Compete Period, (i) solicit, employ, or otherwise engage
as an employee, independent contractor or otherwise, any person who is an
employee of the Company or an Affiliate, or in any manner induce, or attempt to
induce, any employee of the Company or its Affiliates to terminate his or her
employment with the Company or its Affiliate; or (ii) interfere with the
Company's or its Affiliate's relationship with any person or entity that, at any
time during the Employment Period, was an employee, contractor, supplier or
customer of the Company or its Affiliate; or
(d) at any time after the termination of his employment,
disparage the Company or its Affiliates or any shareholders, directors,
officers, employees, or agents of the Company or any of its Affiliates, so long
as the Company does not disparage the Executive;
provided, however, that notwithstanding the foregoing, paragraphs (a) and (b) of
this Section 5.2 shall not apply if the Executive's employment is terminated
pursuant to Section 4.3(d) hereof. If any covenant in this Section 5.2 is held
to be unreasonable, arbitrary or against public policy, such covenant will be
considered to be divisible with respect to scope, time and geographic area, and
such lesser scope, time or geographic area, or all of them, as a court of
competent jurisdiction may determine to be reasonable, not arbitrary and not
against public policy, will be effective, binding and enforceable against the
Executive. The Executive hereby agrees that this covenant is a material and
substantial part of this Agreement and that: (i) the geographic limitations are
reasonable; (ii) the term of the covenant is reasonable; and (iii) the covenant
is not made for the purpose of limiting competition per se and is reasonably
related to a protectable business interest of the Company. The period of time
applicable to any covenant in this Section 5.2 will be extended by the duration
of any violation by the Executive of such covenant.
5.3 COVENANTS OF THE COMPANY. The Company covenants and agrees that,
during the Non-Compete Period, the following provisions shall apply:
(a) if the Executive's employment is terminated due to the
death or Disability of the Executive, for Cause by the Company or by the
Executive without having provided the Required Notice, no additional
compensation shall be payable or Benefits provided to the Executive during the
Non-Compete Period except as specifically provided for in Section 4.3 hereof.
(b) In addition to the compensation payable or Benefits to be
provided to the Executive as provided in Section 4.3 hereof, if the Executive's
employment is terminated for any reason other than as set forth in Section
5.3(a) hereof, the Company shall continue to (i) pay to the Executive during the
Non-Compete Period the Base Salary as provided herein as if the Executive
remained employed by the Company during the Non-Compete Period and (ii) provide
all the Benefits to the Executive (and the Executive's spouse and dependents, as
applicable) that the Company would have provided pursuant to this Agreement, as
if the Executive remained employed by the Company during the Non-Compete Period,
unless the Company is prohibited from providing any such Benefits pursuant to
applicable law.
(c) Notwithstanding the foregoing provisions of this Section
5.3, the Company may pay to the Executive the cash equivalent of any Benefit
that the Company is otherwise obligated to provide the Executive in lieu of
providing such Benefit.
(d) Notwithstanding the foregoing provisions of this Section
5.3, the Company shall have the right, at any time, to release the Executive
from the covenants contained in this Section 5, at which time the Executive's
right to receive and the Company's obligation to make any payments under
7
this Section 5.3 shall terminate upon the payments by the Company to the
Executive of all amounts due under this Section 5.3 up to and including the date
of such release.
6. NON-DISCLOSURE COVENANT
6.1 ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive acknowledges that
(a) during the Employment Period the Executive will be afforded access to
Confidential Information; (b) public disclosure of such Confidential Information
could have an adverse effect on the Company and its business; and (c) the
provisions of this Section 6 are reasonable and necessary to prevent the
improper use or disclosure of Confidential Information.
6.2 COVENANTS OF THE EXECUTIVE. The Executive covenants as follows:
(a) CONFIDENTIALITY. During and after his employment with the
Company and its Affiliates, the Executive will hold in confidence the
Confidential Information and will not disclose such Confidential Information to
any person other than in connection with the performance of his duties and
obligations hereunder, except with the specific prior written consent of the
Board of Directors or the Chief Executive Officer; provided, however, that the
parties agree that this Agreement does not prohibit the disclosure of
Confidential Information where applicable law requires, including, but not
limited to, in response to subpoenas and/or orders of a governmental agency or
court of competent jurisdiction. In the event that the Company is requested or
becomes legally compelled under the terms of a subpoena or order issued by a
court of competent jurisdiction or by a governmental body to make a disclosure
of Confidential Information, the Executive agrees that he will (i) immediately
provide the Company with written notice of the existence, terms and
circumstances, surrounding such request(s) so that the Company may seek an
appropriate protective order or other appropriate remedy, (ii) cooperate with
the Company in its efforts to decline, resist or narrow such requests, and (iii)
if disclosure of such Confidential Information is required in the opinion of
counsel, exercise reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such disclosed
information.
(b) TRADE SECRETS. Any and all trade secrets of the Company
will be entitled to all the protections and benefits under the federal and state
trade secret and intellectual property laws and any other applicable law. If any
information that the Company deems to be a trade secret is found by a court of
competent jurisdiction not to be a trade secret for purposes of this Agreement,
such information will, nevertheless, be considered Confidential Information for
the purposes of this Agreement, so long as it otherwise meets the definition of
Confidential Information. The Executive hereby waives any requirement that the
Company submit proof of the economic value of any trade secret or post a bond or
other security.
(c) REMOVAL. The Executive will not remove from the Company's
premises (except to the extent such removal is for purposes of the performance
of the Executive's duties at home or while traveling, or except otherwise
specifically authorized by the Company) any document, record, notebook, plan,
model, component, device, or computer software or code, whether embodied in a
disk or in any other form belonging to the Company or used in the Company's
business (collectively, the "Proprietary Items"). All of the Proprietary Items,
whether or not developed by the Executive, are the exclusive property of the
Company. Upon termination of his employment, or upon the request of the Company
during the Employment Period, the Executive will return to the Company all of
the Proprietary Items and Confidential Information in the Executive's possession
or subject to the Executive's control, and the Executive shall not retain any
copies, abstracts, sketches, or other physical embodiments in electronic form or
otherwise, of any such Proprietary Items or Confidential Information.
8
(d) DEVELOPMENT OF INTELLECTUAL PROPERTY. Any and all
writings, inventions, improvements, processes, procedures and/or techniques
which the Executive (i) made, conceived, discovered or developed, either solely
or jointly with any other person or persons, at any time when the Executive was
an employee of the Company whether pursuant to this Agreement or otherwise,
whether or not during working hours and whether or not at the request or upon
the suggestion of the Company, which relate to or were useful in connection with
any business now or hereafter carried on or contemplated by the Company,
including developments or expansions of its fields of operations, or (ii) may
make, conceive, discover or develop, either solely or jointly with any other
person or persons, at any time when the Executive is an employee of the Company,
whether or not during working hours and whether or not at the request or upon
the suggestion of the Company, which relate to or are useful in connection with
any business now or hereafter carried on or contemplated by the Company,
including developments or expansions of its present fields of operations, shall
be the sole and exclusive property of the Company. The Executive shall make full
disclosure to the Company of all such writings, inventions, improvements,
processes, procedures and techniques, and shall do everything necessary or
desirable to vest the absolute title thereto in the Company. The Executive shall
write and prepare all specifications and procedures regarding such inventions,
improvements, processes, procedures and techniques and otherwise aid and assist
the Company so that the Company can prepare and present applications for
copyright or patent therefor and can secure such copyright or patent wherever
possible, as well as reissues, renewals, and extensions thereof, and can obtain
the record title to such copyright or patents so that the Company shall be the
sole and absolute owner thereof in all countries in which it may desire to have
copyright or patent protection. The Executive shall not be entitled to any
additional or special compensation or reimbursement regarding any and all such
writings, inventions, improvements, processes, procedures and techniques.
7. GENERAL PROVISIONS OF SECTIONS 5 AND 6.
7.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY. The Executive acknowledges
that the injury that would be suffered by the Company as a result of a breach of
the provisions of Sections 5 and 6 of this Agreement would be irreplaceable and
that an award of monetary damages to the Company for such a breach may be an
inadequate remedy. Consequently, the Company will have the right, in addition to
any other rights it may have, to obtain a temporary restraining order and/or
injunctive relief to restrain any breach or threatened breach or otherwise to
specifically enforce any provision of this Agreement. The Executive waives any
requirement that the Company secure or post any bond in conjunction with any
such remedies. The Executive further agrees to and hereby does submit to in
personam jurisdiction before each and every court for that purpose. Without
limiting the Company's rights under this Section 7 or any other remedies
available to the Company, if the Executive breaches any other provisions of
Sections 5 and 6 and such breach is proven in a court of competent jurisdiction,
the Company will have the right to cease making any payments or providing
Benefits otherwise due to the Executive under this Agreement.
7.2 COVENANTS OF SECTIONS 5 AND 6 ARE ESSENTIAL AND INDEPENDENT
COVENANTS. The covenants of the Executive in Sections 5 and 6 hereof are
essential elements of this Agreement, and without the Executive's agreement to
comply with such covenants, the Company would not have entered into this
Agreement or continued the employment of the Executive. The Company and the
Executive have independently consulted their respective counsel and have been
advised in all respects concerning the reasonableness and propriety of such
covenants, with specific regard to the nature of the business conducted by the
Company. In addition, the Executive's covenants in Sections 5 and 6 are
independent covenants and the existence of any claim by the Executive against
the Company under this Agreement or otherwise will not excuse the Executive's
breach of any covenant in Sections 5 or 6. Notwithstanding anything in the
Agreement to the contrary, (i) the covenants and agreements of the Executive in
Sections
9
5 and 6 shall survive the termination of the Agreement, except as provided
below, and (ii) the covenants and agreements in Section 5.2(a) shall be
effective as of the Effective Date.
8. GENERAL PROVISIONS.
8.1 INDEMNIFICATION. The Company shall indemnify and hold harmless the
Executive to the fullest extent permitted by applicable law against all costs
(including reasonable attorneys' fees and costs), judgments, penalties, fines,
amounts paid in settlements, interest and all other liabilities incurred or paid
by the Executive in connection or in any way associated with the investigation,
defense, prosecution, settlement, or appeal of any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, including actions pursuant to the Xxxxxxxx-Xxxxx Act of 2002, and
to which the Executive was or is a party or is threatened to be made a party by
reason of the fact that the Executive is or was an officer, employee or agent of
the Company, or any of its subsidiaries or Affiliates, including any property
owner or condominium association that the Executive has been asked to serve on
by the Company, or by reason of anything done or not done by the Executive in
any such capacity or capacities, provided that the Executive acted in good
faith, and in a manner the Executive reasonably believed to be in or not opposed
to the best interests on the Company, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
Company also shall pay any and all expenses (including reasonable attorney's
fees) incurred by the Executive as a result of the Executive being called as a
witness in connection with any matter involving the Company and/or any of its
officers or directors. Nothing herein shall limit or reduce any rights of
indemnification to which the Executive might be entitled under the
organizational documents of the Company or as allowed by applicable law.
8.2 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power or privilege under this Agreement will
operate as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right for the party giving such notice
or demand or take further action without notice or demand as provided in this
Agreement.
8.3 SUCCESSORS.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement "Company" shall mean the Company as
hereinbefore defined and any successor to its
10
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
8.4 NOTICES. All notices, consents, waivers and other communication
required under this Agreement must be in writing and will be deemed to have been
duly given when (a) delivered by hand (with written confirmation of receipt),
(b) sent by facsimile (with written confirmation of receipt), provided that a
copy is mailed by certified mail, return receipt requested, the same day or the
next Business Day, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service, in each case to the
appropriate addresses and facsimile numbers set forth below (or to such other
addresses and facsimile numbers as a party may designate by notice to the other
parties):
If to the Company:
Technical Olympic USA, Inc.
0000 Xxxxxxxxx Xxxx., Xxxxx 000-X
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Mon, CEO
Facsimile No.: (000) 000-0000
With a copy to Xxxxxxxx Xxxxxxxx, General Counsel, at the same address.
If to the Executive:
Xxxxx Xxxxxxxxxx
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
8.5 ENTIRE AGREEMENT; SUPERSEDURE. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof, and
expressly terminates, rescinds, replaces and supersedes all prior and
contemporaneous agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof, including, without
limitation, the Prior Agreement.
8.6 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT WILL BE
GOVERNED BY THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS IN BROWARD COUNTY, FLORIDA, FOR THE PURPOSES OF
ANY PROCEEDINGS ARISING OUT OF THIS AGREEMENT.
8.7 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court or competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect, unless the absence of such
invalid or unenforceable provision materially alters the rights or obligations
of either party hereto. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable, unless the absence of such invalid or
unenforceable portion of such provision materially alters the rights or
obligations of either party hereto.
8.8 TAX WITHHOLDING AND REPORTING. The Company shall withhold from all
payments hereunder all applicable taxes that it is required to withhold with
respect to payments and Benefits provided under this Agreement and shall report
all such payments and withholdings to the appropriate taxing authorities as
required by applicable law.
11
8.9 AMENDMENTS AND WAIVERS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and a member of the Board of
Directors authorized by the Board of Directors to execute the same. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
in compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.
8.10 SURVIVAL. The provisions of Sections 4, 5, 6, 7, and 8 shall
survive the termination of this Agreement.
8.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, by original or facsimile signatures, each of which shall
constitute an original and all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the Effective Date.
TECHNICAL OLYMPIC USA, INC.
By: /s/ Xxxxxxx X. Mon /s/ Xxxxx Xxxxxxxxxx
----------------------------- -----------------------------------------
Name: Xxxxxxx X. Mon Xxxxx Xxxxxxxxxx
Title: Chief Executive Officer
12
EXHIBIT A
DEFINITIONS
"ACCRUED OBLIGATIONS" means, at the relevant date, the sum of the following: (i)
the Executive's earned or accrued, but unpaid, Base Salary through the date of
termination of the Executive's employment as provided herein; (ii) any Bonus
earned or accrued and vested, but unpaid (together with accrued interest or
earnings credited thereon); (iii) the economic value of any of the Executive's
accrued, but unused, vacation time; and (iv) any unreimbursed business expenses
incurred by the Executive.
"AFFILIATE" means a person or entity who or which, (i) with respect to an
entity, directly or indirectly through one or more intermediaries, controlled,
is controlled by or is under common control with, such entity; or (ii) with
respect to the Executive, is a parent, spouse or issue of the Executive,
including persons in an adopted or step relationship.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUSINESS" means the business of developing land for, and the design and
construction of, and the promotion, marketing and sale of, single-family
residences, townhouses, and condominiums.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or bank holiday
recognized in Hollywood, Florida.
"CAUSE" means:
(a) an act of fraud, misappropriation or personal dishonesty taken by
the Executive and intended to result in the substantial personal enrichment of
the Executive at the expense of the Company or an Affiliate, including, but not
limited to, the willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the Company;
(b) the material violation by the Executive of a material obligation of
the Executive under this Agreement, including but not limited to, the willful
and continued failure of the Executive to perform substantially the Executive's
duties with the Company or one of its Affiliates (other than such failure
resulting from incapacity due to physical or mental illness) which violation or
failure is not remedied within ten (10) Business Days (or such additional
reasonable period of time if additional time is necessary to remedy) after
receipt of written notice or demand for substantial performance or corrective
action is delivered to the Executive by the Board of Directors or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Board of Directors or the Chief Executive Officer believes that the
Executive has not substantially performed the Executive's duties or violated an
obligation under this Agreement;
(c) the conviction, or plea of nolo contendere, of the Executive for
any felony or any misdemeanor involving moral turpitude; or
(d) a material violation of any express direction of the Board of
Directors or the Chief Executive Officer of the Company or a material violation
of any rule, regulation, policy or plan established by the Board of Directors
from time to time regarding the conduct of the Company's employees and/or its
business, which violation is not remedied within ten (10) Business Days (or such
additional reasonable period of time if additional time is necessary to remedy)
after receipt of written notice from the Company of such failure.
13
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"CONFIDENTIAL INFORMATION" means any and all intellectual property of the
Company (or any of its Affiliates), including but not limited to:
(a) trade secrets concerning the business and affairs of the Company
(or any of its Affiliates), product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned research development,
current and planned manufacturing or distribution methods and processes,
customer lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs (including object
code and source code), computer software and database technologies, systems,
structures, and architectures (and related formulae, compositions, processes,
improvements, devices, know-how, inventions, discoveries, concepts, ideas,
designs, methods and information), and any other information, however
documented, that is a trade secret under federal, state or other applicable law;
and
(b) information concerning the business and affairs of the Company (or
any of its Affiliates) (which includes historical financial statements,
financial projections and budgets, historical and projected sales, capital
spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials), however documented; and notes,
analysis, compilations, studies, summaries, and other material prepared by or
for the Company (or any of its Affiliates) containing or based, in whole or in
part, on any information included in the foregoing.
Notwithstanding the foregoing, Confidential Information shall not include
information otherwise lawfully known generally by or readily accessible to the
trade or general public other than by the improper disclosure by the Executive.
"DISABILITY" means, for all purposes of this Agreement, the inability of the
Executive, due to the injury, illness, disease, or bodily or mental infirmity,
to engage in the performance of substantially all of the usual duties of
employment with the Company as contemplated by Section 2.2 herein, such
Disability to be determined by the Board of Directors of the Company upon
receipt and in reliance on competent medical advice from one (1) or more
individuals, selected by the Board, who are qualified to give such professional
medical advice. The Executive must submit to a reasonable number of examinations
by the medical doctor making the determination of Disability, and the Executive
hereby authorizes the disclosure and release to the Company of such
determination and all supporting medical records. If the Executive is not
legally competent, the Executive's legal guardian or duly authorized
attorney-in-fact will act in the Executive's stead for the purposes of
submitting the Executive to the examinations, and providing the authorization of
disclosure required hereunder.
It is expressly understood that the Disability of the Executive for a period of
one hundred twenty (120) calendar days or less in the aggregate during any
period of twelve (12) consecutive months, in the absence of any reasonable
expectation that his Disability will exist for more than such a period of time,
shall not constitute a failure by him to perform his duties hereunder and shall
not be deemed a breach or default and the Executive shall receive full
compensation for any such period of Disability or for any other temporary
illness or incapacity during the term of this Agreement.
"EMPLOYMENT PERIOD" means the term of the Executive's employment under this
Agreement.
"FISCAL YEAR" means the fiscal year of Company on the Effective Date or as it
may change from time to time.
14
"GOOD REASON" means:
(a) that without the Executive's prior written consent and in the
absence of Cause, one or more of the following events occur:
(i) any materially adverse change in the Executive's
authority, duties or responsibilities as set forth in Section 2 or any
assignment to the Executive of duties and responsibilities materially and
substantially inconsistent with those normally associated with such position;
(ii) the Company requiring the Executive to be primarily based
at any office more than fifty (50) miles outside the Boca Raton, Florida
metropolitan area, excluding travel reasonably required in the performance of
the Executive's responsibilities and excluding the fulfillment of
responsibilities at the Company's corporate headquarters located in Hollywood,
Florida;
(iii) any failure by the Company to comply with and satisfy
Section 8.3(c) of this Agreement; or
(iv) the material violation by the Company of a material
obligation of the Company under this Agreement, which violation or failure is
not remedied within ten (10) Business Days (or such additional reasonable period
of time if additional time is necessary to remedy) after receipt of written
notice or demand for substantial performance or corrective action is delivered
to the Company and the Chief Executive Officer of the Company by the Executive
which specifically identifies the manner in which Executive believes that the
Company has not substantially performed the Company's duties or violated an
obligation under this Agreement; and
(b) within sixty (60) Business Days learning of the occurrence of any
such event, and in the absence of any circumstances that constitutes Cause, the
Executive terminates employment with the Company by written notice to the Chief
Executive Officer of the Company; provided, however, that the events set forth
in subparagraphs (a)(I, II OR III) shall not constitute Good Reason for purposes
of this Agreement unless, within twenty (20) Business Days of Executive's
learning of such event, the Executive gives written notice of the event to the
Company and the Company fails to remedy such event within thirty (30) Business
Days (or such additional reasonable period of time if additional time is
necessary to remedy) of receipt of such notice.
"INDEX" shall mean the Consumer price Index for the Austin, Texas area published
by the United States government or, if publication of the Index is discontinued,
any comparable statistics on the cost of living for the Austin, Texas area as
computed and published by an agency of the United States government or by any
regularly published national financial periodical that does compute and publish
such statistics.
"NON-COMPETE PERIOD" means the period beginning on the Effective Date and ending
on the first anniversary of the Executive's termination of employment with the
Company.
"PRO RATA BONUS" shall mean a pro rata Bonus for the year in which the
Executive's employment terminates based on the performance of the Company for
the year during which such termination occurs.
"TERMINATION PAYMENT" shall mean a lump sum payment in cash equal to the sum of
the following: (A) an amount equal to the aggregate Base Salary (as it may be
increased from time to time pursuant to this Agreement) that would have been
payable to the Executive if his employment had continued for the then remaining
term of the Employment Period, (B) the Pro Rata Bonus, (C) an amount equal to
the aggregate Bonus that would have been payable to the Executive if his
employment had continued for the then remaining term of the Employment Period
(other than the year in which the Executive's employment
15
terminates), calculated by multiplying the highest Bonus paid to the Executive
in the prior three (3) fiscal years by the number of years remaining in the
Employment Period, (D) the Accrued Obligations, and (E) the fair market value of
any Benefits and perquisites (other than health benefits, if paid to the
Executive pursuant to subparagraph (ii) of Section 4.3(d) of this Agreement to
be provided to the Executive for the then remaining term of the Employment
Period.
16
EXHIBIT B
BONUS PLAN
In accordance with Article 3.3 of the Agreement, the Executive shall be eligible
to receive an annual cash bonus calculated in accordance with this Exhibit B.
The bonus to be paid to Executive shall be based upon a combination of Regional
Results and Consolidated Results. Consolidated results shall represent 30% of
bonus and regional results (earnings of the Xxxxx operations in South Florida)
shall represent 70% of bonus.
2004 ANNUAL BONUS
For 2004, the total bonus to Executive shall be not less than Nine Hundred and
Sixty Nine Thousand and Sixty Four Dollars ($969,064).
CONSOLIDATED RESULTS (30% OF TOTAL):
Bonus based upon consolidated results shall be calculated on a return on equity
basis, where "return" is after tax earnings of TOUSA and consolidated entities,
adding back corporate bonuses, net, and unusual charges, and "equity" is the
average of the quarterly ending equity balance beginning with the prior year's
ending equity. Executive's bonus payment shall be earned by incremental XXX, as
follows:
XXX % of Bonus Earned
--- -----------------
0 to 6 % = 0
>6 % to 9 % = 1/3
>9 % to 12 % = 1/3
> 12 % = 1/3
REGIONAL RESULTS (70% OF TOTAL):
Bonus based upon regional results shall be calculated as 1.3% of regional
earnings.
PAYMENT OF BONUS
The annual bonus shall be payable in quarterly installments, payable within 15
days following final calculation of the bonus, which shall occur upon the
financial closing of each fiscal quarter. All bonus payments shall be subject to
income and payroll taxes in accordance with applicable requirements and shall be
paid in accordance with company payroll policies.
17
