EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this ____ day
of April, 1999, by and between ATLANTIC GULF COMMUNITIES CORPORATION, a Delaware
corporation (the "Employer") and XXXXXXX X. XXXXXXX (the "Employee").
WITNESSETH:
WHEREAS, Employer owns one hundred (100%) percent of the beneficial
interest in Aspen Springs Ranch, Inc., a Colorado corporation (the "Development
Company");
WHEREAS, Employer believes that the future services of Employee will be
a valuable asset to Employer and the Development Company, and Employer desires
to secure the benefits of the services of Employee; and
WHEREAS, Employee is willing to be employed on a full-time basis on the
terms, conditions and covenants as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and other good and valuable
consideration, receipt and sufficiency of which is hereby acknowledged, the
Employer and Employee agree as follows
ARTICLE I
TERMS OF EMPLOYMENT
Section 1.1 TERM. The Employer hereby employs Employee commencing
on or about the 15th day of May, 1999 (the "Commencement Date"), and continuing
thereafter for a term of five (5) years or until terminated as set forth herein,
upon the terms and conditions contained herein.
ARTICLE II
DUTIES OF EMPLOYEE AND EMPLOYER
Section 2.1 DUTIES OF EMPLOYEE. Employee shall be employed as Vice
President of Employer and President and Chief Operating Officer of the
Development Company and shall perform such duties as may be reasonably assigned
by Employer's President or the Board of Directors of Employer ("Board"), or
both. The Employee shall devote his entire exclusive productive time, ability
and attention to the business of the Employer and the Development Company during
the term of this Agreement. The Employee shall not directly or indirectly render
any services of a business, commercial or professional nature, to any other
person or organization, whether for compensation or otherwise, without the prior
written consent of the Employer.
Section 2.2 DUTIES OF EMPLOYER. Employer shall provide Employee
with necessary and reasonable office space and all staffing requirements (as
mutually determined by the parties hereto
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to be necessary) in connection with the performance of his duties hereunder, and
shall pay all compensation due hereunder promptly in accordance with the terms
hereof. Employee shall be entitled to up to four (4) weeks paid vacation per
year, provided that the taking of such vacation does not unreasonably conflict
with the activities of Employer. If this Agreement is terminated for any reason,
accumulated vacation time shall be paid to Employee in accordance with
Employer's company policy, provided, however, such accumulated vacation time
shall not exceed two (2) weeks.
ARTICLE III
COMPENSATION & BENEFITS
Section 3.1 COMPENSATION. As compensation for services to be
rendered pursuant to this Agreement, the Employee shall be compensated as
follows:
3.1.1 SALARY. Commencing on the Commencement Date, the
Employee shall be paid a base compensation of Two Hundred Fifty Thousand Dollars
($250,000) per year. Such compensation shall be payable in accordance with
Employer's customary payment schedule.
3.1.2 ANNUAL BONUS. On or before January 31, 2000, Employee
shall receive a guaranteed bonus of One Hundred Seventy-Five Thousand Dollars
($175,000) for the year 1999. Commencing on January 1, 2000, Employee's annual
bonus will be based on annual business performance when compared to mutually
agreed upon goals and objectives for the Development Company. Based upon the
actual performance of the Development Company when compared to the goals and
objectives, the Employee may earn up to seventy (70%) percent of the Employee's
annual salary as described in Paragraph 3.1.1 above as reasonably determined by
the Board. The annual bonus for the year 2000 and subsequent years will be paid
in accordance with Employer's customary payment schedule.
3.1.3 PARTICIPATION AGREEMENT. Contemporaneous with the
execution of this Agreement, Employer and Employee will enter into a
Participation Agreement which shall be in the same form as EXHIBIT "A" attached
hereto. The Participation Agreement will provide, among other things, that the
Employee shall be entitled to five (5%) percent of "Net Profits" as defined
therein and payable from "Positive Net Cash Flow" of the Development Company.
3.1.4 EXPENSES. Employee shall be entitled to reimbursement
or payment on his behalf of the following expenses:
3.1.4.1 All actual out-of-pocket relocation
expenses, including house hunting trips and
temporary housing expenses, and all actual
out-of-pocket costs of moving from
Employee's current home in Greensboro,
Georgia as reasonably incurred by Employee;
3.1.4.2 Upon selection of a rental home to be
located in the Aspen, Colorado area (which
rental home must be reasonably acceptable to
Employer), and until such time as Employee
has closed on the sale of
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his existing home in Greensboro, Georgia,
Employer shall pay all housing expenses,
including, but not limited to, rent,
utilities and insurance. Within ninety (90)
days of the Commencement Date, Employee
agrees to list his existing home with a
broker at a price reasonably acceptable to
Employee and will use good faith and
diligent efforts to market and sell the
same. Upon the closing of the existing home,
Employer will pay the difference between all
housing expenses as described above and Four
Thousand Dollars ($4,000). The lease for
such rental property shall be in the name of
the Employer and the occupancy by the
Employee shall be deemed a condition of
employment. The obligation to lease such
home shall terminate upon the second
anniversary of the Commencement Date or
sooner if Employee purchases a home or
constructs a home during such two (2) year
period. Should this Agreement be terminated
for any reason, Employee agrees to vacate
such home within thirty (30) days of such
termination;
3.1.4.3 The use of a 4-wheel drive vehicle
provided by Employer, which may be used by
Employee for his personal use as well. Upon
termination of this Agreement for any
reason, Employee will immediately return the
vehicle to Employer;
3.1.4.4 The payment of all dues associated
with the membership in the Club as described
below;
3.1.4.5 All employee benefit plans currently
provided to Employer's senior management
employees;
3.1.4.6 Reimbursement for all reasonable
travel, lodging, food and related expenses
incurred in connection with Employee's
employment, including expenses in connection
with attendance of mutually agreeable
seminars reimbursable in accordance with
Employer's standard policy;
3.1.4.7 Reimbursement to Employee of
customary and reasonable closing costs,
commissions and other customary closing
expenses incurred by Employee upon sale of
Employee's house in Greensboro, Georgia; and
3.1.4.8 Reimbursement to Employee of
customary and reasonable closing costs,
financing fees and other customary closing
expenses incurred by Employee upon the
acquisition of the lot and club membership
described in Paragraph 3.1.5 below.
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Employer's obligation to reimburse Employee for expenses set
forth in this Section 3.1.4 shall terminate upon the termination of this
Agreement, except for the reimbursement of such expenses incurred prior to such
termination.
3.1.5 PURCHASE OF LOT AND MEMBERSHIP. Employee will select a
lot from an undeveloped portion of the Development Company's property, which is
available inventory and mutually acceptable to the parties hereto. Such lot will
be reserved for acquisition by Employee together with a membership in the Aspen
Springs Club. The purchase price for such lot and membership shall be at the
original offering price and Employee agrees to execute a standard agreement and
membership documents. Employee shall earn a credit in the amount of One Hundred
Thousand Dollars ($100,000) per year for each year of employment under this
Agreement toward the purchase price of such lot and membership (the "Credits").
At the time that Employee acquires such lot and membership, Employee will pay
the difference between the retail value of such lot and membership and Five
Hundred Thousand Dollars ($500,000). Employee will also execute a non-recourse
and contingent promissory note to the Employer for the amount remaining after
subtracting any earned Credits from Five Hundred Thousand Dollars ($500,000)
(the "Note"). The Note shall provide for interest in the amount of imputed
interest required by the Internal Revenue Service and shall also provide for a
reduction of the indebtedness evidenced thereby by the earned Credits as
provided herein. The Note shall also provide for a maturity date of the fifth
anniversary of the Commencement Date. The repayment of the indebtedness
evidenced by the Note will be secured by a deed of trust. The deed of trust will
provide that the Employer will subordinate the lien thereof to a construction
loan for a home to be built on the lot on terms reasonably acceptable to
Employer. If this Agreement is terminated by Employer without cause, Employee
shall, within ninety (90) days of such termination, repay the outstanding
balance due on the Note. If this Agreement is terminated for any other reason,
Employee shall have thirty (30) days after such termination to repay the
outstanding balance due on the Note. If the closing of the Lot has not occurred
prior to such termination, Employer shall have no duty to provide such
financing.
3.1.6 CLUB MEMBERSHIP EXPENSE. For so long as Employee is
employed by Employer, the membership in the Club shall be dues free.
ARTICLE IV
TERMINATION FEE
Section 4.1 TERMINATION BY EMPLOYER. If the Employer terminates
employment of the Employee, without cause, prior to the expiration of the five
(5) year term of this Agreement, Employer shall be entitled to: (i) a lump sum
payment of Five Hundred Thousand Dollars ($500,000); (ii) the recognition of the
Credits earned for the purchase of the lot and membership as described in
Section 3.1.5 above, but in no event less than One Hundred Thousand Dollars
($100,000); and (iii) the first year's bonus if not previously paid.
Section 4.2 TERMINATION BY EMPLOYEE. If the Employee terminates his
employment prior to the expiration of the five (5) year term of this Agreement,
the Employee shall only be entitled to the compensation earned through the date
of such termination and the recognition of the Credits
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earned for the purchase of the lot and membership, provided that the Employee
has, in fact, closed on the purchase of the lot and membership. If the Employer
terminates this Agreement and has not closed on the purchase of the lot and
membership, Employee shall not be entitled to any Credits. In any event, should
Employee terminate this Agreement, Employee shall not be entitled to any amount
that would otherwise be due under the Participation Agreement.
Section 4.3 PARTICIPATION. If the Employer terminates this
Agreement without cause, Employee shall be entitled to all amounts that would
otherwise accrue to the benefit of the Employee under the Participation
Agreement for the period of time from the Commencement Date until six (6) months
from the date of such termination. If Employer terminates this Agreement with
cause, Employee shall be entitled to all amounts that would otherwise accrue to
the benefit of the Employee under the Participation Agreement for the period of
time from the Commencement Date of the Employment Agreement until the date of
such termination. Employee recognizes, however, that payments due as a result of
the Participation Agreement are paid from Positive Net Cash Flow as defined in
the Participation Agreement.
ARTICLE V
COVENANTS
Section 5.1 COVENANTS. Employee hereby covenants and presents:
5.1.1 During the term of this Agreement, the Employee shall
not directly or indirectly, either 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 any business of the
Employer or any of Employer's subsidiaries or affiliated companies.
5.1.2 Upon the termination of his employment, whether by
expiration of this Agreement or otherwise, the Employee shall not, directly or
indirectly, within the State of Colorado, enter into or engage in direct
competition with any business activity of the Employer or Development Company
either as an individual on his own, or as a partner or joint venture, or as an
employee or agent for any person or as an officer, director or shareholder, or
otherwise, for a period of two (2) years following the date of termination of
his employment hereunder.
5.1.3 During the term of his employment under this Agreement,
the Employee will have access to and become familiar with various trade secrets
and confidential information consisting of business contracts, customer lists,
records, and specifications, all of which are owned by the Employer and which
are regularly used in the operations of the Employer's business. The Employee
shall not disclose any of the aforesaid trade secrets and confidential
information, directly or indirectly, nor use them in any way, either during the
term of this Agreement, or at any time thereafter, except as required in the
course of his employment hereunder. They shall remain the exclusive property of
the Employer and may not be disclosed under any circumstances to any person or
party without the prior written consent of the Employer.
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5.1.4 Employee acknowledges that it has received copies of
the following documents:
5.1.4.1 that certain Loan Agreement, dated
September 3, 1998, between the Company and
Xxxxxx Brothers Holdings, Inc.;
5.1.4.2 that certain Senior Secured
Facilities Credit Agreement, dated September
3, 1998, between the Company and Xxxxxx
Xxxxxxx Senior Funding, Inc.;
5.1.4.3 that certain Exchange Agreement,
dated September 3, 1998, by and between the
Company and Spring Valley Holding USA, Ltd.,
together with the Addendum thereto; and
5.1.4.4 the approved pro-forma and budget for
the project (the documents described in
5.1.4.1, 5.1.4.2, 5.1.4.3 and this 5.1.4.4
being collectively referred to herein as the
"Project Agreements").
Employee agrees to comply with all of the terms and conditions
of the Project Agreements, as well as all applicable laws, rules, regulations
and permits with respect to the project, the development of the project and
Employee's performance of its duties hereunder.
5.1.5 The Employee shall not, either during the term of this
Agreement, or the first 180 days following the termination of this Agreement,
solicit, encourage or induce any employee of the Employer to leave his or her
employment with the Company.
Section 5.2 REMEDY FOR COVENANT VIOLATION. Each covenant set forth
in subsections 5.1.1, 5.1.2, 5.1.3, 5.1.4 and 5.1.5 above is separate and
distinct from every other covenant set forth herein. In the event of the
invalidity of any covenant, the remaining covenants shall be deemed independent
and divisible. Employee recognizes that a breach of any of the covenants
contained in subsections 5.1.1, 5.1.2, 5.1.3, 5.1.4 and 5.1.5 would irreparably
injure the Employer. Accordingly, the Employer may, in addition to pursuing its
other remedies, obtain an injunction from any court having jurisdiction of the
matter restraining any further violation, and no bond or other security shall be
required in connection with such injunction.
ARTICLE VI
TERMINATION
Section 6.1 TERMINATION FOR CAUSE. Notwithstanding anything
contained in this Agreement to the contrary, Employer may at any time terminate
this Agreement without further obligation to Employee upon the happening of any
of the following events:
6.1.1 If Employee is convicted of a felony or other criminal
offense involving moral turpitude; or
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6.1.2 Employee is or shall be unable to discharge properly
his obligations hereunder through illness or through accident or any other cause
whatsoever for up to periods aggregating ninety (90) days in any continuous
period of three hundred sixty-five (365) days; or
6.1.3 If Employee shall die or be adjudicated of unsound
mind; or
6.1.4 If Employee commits a material breach of this Agreement
including but not limited to a breach of any covenant contained in
Section 4.01 hereof; or
6.1.5 If Employee violates any federal or state securities
laws; or
6.1.6 If Employee misappropriates Employer's funds; or
6.1.7 The habitual use of alcohol or drugs by Employee to a
degree that such use substantially interferes with Employee's
performance of his duties or obligations under this Agreement; or
6.1.8 Employee's deliberate and premeditated acts against the
Company's best interests; or
6.1.9 Employee's violation of any law or regulation governing
Employee's conduct under this Agreement.
Section 6.2 TERMINATION WITHOUT CAUSE. Employer may terminate
Employee at any time, without cause, in which case the Employee shall be
entitled to the Termination Fee described in Section 4.1 above and the interests
in the Participation Agreement described in Section 4.3 above.
Section 6.3 DUTIES UPON TERMINATION. Upon the termination of this
Agreement, Employee shall immediately deliver to Employer all the books,
records, documents, customer or supplier lists and all other assets or property
of Employer in his possession, custody or under his control, without making
copies of any such documents whether for his own use or for any other purpose.
Section 6.4 TERMINATION BY EMPLOYEE. Employee may terminate this
Agreement upon ninety (90) days' written notice to Employer. Should Employer
fail to make any payment due Employee when it is due and within ten (10)
business days after written demand by Employee, Employee may terminate this
Agreement in writing without advance notice, and shall not be bound by the
Covenants set forth herein.
ARTICLE VII
REPRESENTATIONS
Section 7.1 REPRESENTATIONS OF EMPLOYEE. That he has been advised
that he has the legal ability to enter into this Agreement, and that compliance
with the terms hereof will not cause Employee to be in violation of any other
contract, covenant, or rule of law. Employee also represents
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that he has been advised that the Employer has hired an investment banker to
pursue strategic alternative transactions.
Section 7.2 REPRESENTATIONS OF EMPLOYER. Employer represents and
warrants that Employer has the legal ability to enter into this Agreement, and
compliance with the terms hereof will not cause Employer to be in violation of
any other contract, covenant, or rule of law, and further represents and
warrants that its current intention is to continue development of its
properties.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 This Agreement supersedes any and all agreements,
either oral or in writing between the parties hereto with respect to the
employment of the Employee by the Employer, and it contains all of the covenants
and agreements between the parties with respect to such employment in any matter
whatsoever.
Section 8.2 The invalidity or unenforceability of any terms or
provisions, or any clause or portion thereof, of this Agreement shall in no way
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
Section 8.3 This Agreement may not be changed or modified except by
an instrument in writing and signed by the parties hereto.
Section 8.4 Except as otherwise herein expressly provided, this
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their heirs, legal representatives, successors and assigns, provided that the
obligations of Employee hereunder may not be delegated.
Section 8.5 This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
Section 8.6 This Agreement may be executed by each party upon a
separate copy, and in such case, one counterpart of this Agreement shall consist
of enough of such copies to reflect the signatures of all of the parties to this
Agreement. This Agreement shall become effective when one or more counterparts
has been signed by each of the other parties to this Agreement.
Section 8.7 All notices hereunder shall be in writing and shall be
deemed to have been given at the time by hand delivery, or when mailed in any
general or branch United States Post Office enclosed in a registered or
certified postpaid envelope addressed to the address of the respective parties
stated below, or to such changed address as such party may have affixed by
notice as aforesaid:
EMPLOYEE: Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
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EMPLOYER: Atlantic Gulf Communities Corporation
0000 X. Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: President
Provided, however, any notice of change of address shall be effective
only upon receipt.
8.8 Each party hereby waives their respective rights to a jury trial.
8.9 In the event of any litigation under or respecting this Agreement,
the prevailing party shall be entitled to attorney's fees and court costs
through all pretrial, trial, appellate, administrative, and post-judgment
proceedings.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the day and year first above written.
EMPLOYER:
ATLANTIC GULF COMMUNITIES
CORPORATION, a Delaware corporation
By:
Its:
EMPLOYEE:
Xxxxxxx X. Xxxxxxx
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EXHIBIT "A"
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (the "Agreement"), made and entered into
this ____ day of __________, 1999, by and between ATLANTIC GULF COMMUNITIES
CORPORATION, a Delaware corporation (the "Owner"), and XXXXXXX X. XXXXXXX (the
"Participant"), is as follows:
W I T N E S S E T H:
WHEREAS, Owner is the owner of one hundred (100%) percent of the
beneficial interest of Aspen Springs Ranch, Inc., a Colorado corporation (the
"Development Company"); and
WHEREAS, the Development Company owns certain land in Garfield County,
Colorado, described on EXHIBIT "A" (the "Real Property") upon which the
Development Company presently intends to develop a planned unit development
consisting of approximately four hundred one (401) residential lots,
seventy-five (75) cooperative units, two (2) eighteen hole golf courses and
other related amenities (the "Project");
WHEREAS, in developing the Project, the Development Company will
acquire numerous items of personal property and equipment (the "Personal
Property") as well as various permits, approvals, trademarks and water rights
(collectively, the "Entitlements") (the Real Property, Personal Property and
Entitlements are collectively, the "Property");
WHEREAS, in consideration of Participant entering into an Employment
Agreement of even date herewith (the "Employment Agreement") and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Owner has agreed to convey to Participant, pursuant to the terms
recited herein, a right to receive a portion of the net profits from the
development of the Project and the marketing, sales and operation of the
Property arising after the Commencement Date, free and clear of any obligation
by Participant arising after the Commencement Date, except as set forth herein
and in the Employment Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants,
promises and agreements herein contained, the parties hereto do hereby agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1. All capitalized terms referenced or used in this Agreement and
not specifically defined herein shall have the meaning set forth in alphabetical
listing on EXHIBIT "B", which is attached hereto and incorporated by reference.
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ARTICLE 2.
TERM, OPTION TO TERMINATE
2.1. The term of this Agreement shall commence on the Commencement
Date and end upon (i) the termination and winding up of the sale of all of the
Property, including the distribution to Participant of all amounts due to
Participant hereunder, (ii) the execution of a mutual written agreement between
the parties terminating this Agreement, or (iii) in certain circumstances as
provided in the Employment Agreement, the termination of the Employment
Agreement and the distribution to Participant of all sums due to Participant
hereunder (the "Term").
ARTICLE 3.
PARTICIPATION INTEREST
3.1. PARTICIPATION INTEREST. Owner hereby grants and assigns to
Participant a five (5%) percent interest of the Net Profits, if any, generated
from the development of the Project and the marketing, sales and operation of
the Property, as defined herein (the "Participation Interest"). The
Participation Interest shall be paid from Positive Net Cash Flow. To the extent
that a Participation Interest is earned but there is no Positive Net Cash Flow
available to pay the same, the Participation Interest shall accrue until such
time that Positive Net Cash Flow is available. When available, twenty-five (25%)
percent of such Positive Net Cash Flow shall be paid to Participant until such
time that the accrued Participation Interest is paid. Thereafter, Participant
shall receive the Participation Interest through the payment of five (5%)
percent of the Positive Net Cash Flow. In such case, Owner shall receive
ninety-five (95%) percent of such Positive Net Cash Flow and all sums in excess
of the amount necessary to pay the Participation Interest.
3.2. FINANCIAL STATEMENTS. Owner shall provide Participant with a
copy of all its Financial Statements concerning the Property within forty-five
(45) days after the close of each Calendar Quarter. Participant hereby
represents and warrants to Owner that Participant shall treat all Financial
Statements as confidential and shall not disclose any information contained
therein to any person, other than its employees, agents, attorneys, consultants
or affiliated entities.
3.3. AUDIT. Participant shall have the right, at Participant's
expense, to conduct an annual audit of the financial books, records and data of
Owner related to the Project and the Property and the amount of the
Participation Interest. Such audit shall be conducted, at Participant's sole
cost and expense, by Participant or by an accounting firm of Participant's
choice at Owners' offices during normal business hours and, to the extent
practicable, shall be conducted in such a manner as will minimize the
interference which such audit may cause with the business operations of Owner.
3.4. EMPLOYMENT AGREEMENT. As provided in the Employment Agreement,
should the Employment Agreement be terminated by Participant, all rights to
receive the Participation Interest (accrued and in the future) shall also be
immediately terminated. Should the Employment Agreement be terminated by the
Owner without cause, Participant shall be entitled to all Participation Interest
for a period of time from the Commencement Date of the Employment Agreement
until six (6) months from the date of such termination. Should the Employment
Agreement be terminated by Owner with cause, Participant shall be entitled to
all Participation Interest for a period of time from
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the Commencement Date of the Employment Agreement through the date of such
termination.
ARTICLE 4.
PARTICIPANT'S OBLIGATIONS OR LIABILITIES
4.1. LIABILITIES AND OBLIGATIONS. Other than those set forth in the
Employment Agreement, Owner acknowledges that Participant does not have any
liability or obligation arising after the Commencement Date in connection with
the development of the Project and the marketing, sales and operation of the
Property. Subject to the provisions of Section 3.4 herein, the Participation
Interest granted to Participant is a "carried interest" in the Positive Net Cash
Flow as described herein and the payment of said interest to Participant does
not require any additional payment of funds or performance of any obligation by
Participant after the Commencement Date. The parties further acknowledge that
the granting of the Participation Interest and the payment of funds to
Participant does not impose or create any additional liability or obligation of
Participant to Owner other than as set forth in the agreements executed between
the parties.
4.2. CAPITAL CONTRIBUTIONS AND LOANS. Participant has no
responsibility to loan, guarantee or contribute any amount of money to Owner
after the Commencement Date in connection with its ownership of the
Participation Interest.
ARTICLE 5.
OWNER'S COVENANTS AND REPRESENTATIONS
5.1. Owner makes the following representations to Participant,
which representations shall, unless otherwise stated herein, survive the
execution and delivery of this Agreement:
5.1.1. CORPORATE STATUS. Owner is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Delaware, and the person or persons executing this Agreement
have the full power and authority to enter into this Agreement, execute
all documents required hereunder and to bind the Owner to the terms and
conditions recited herein.
5.1.2. AUTHORIZATION. The making, execution, delivery and
performance of this Agreement by Owner has been duly authorized and
approved by all requisite action of the Board of Directors of Owner,
and this Agreement has been duly executed and delivered by the
undersigned officer and constitutes a valid and binding obligation of
Owner, enforceable in accordance with its terms.
5.1.3. VIOLATION OF REPRESENTATIONS. From and after the date
hereof and until the termination of this Agreement, Owner shall not
take any action or omit to take any action which would have the effect
of violating any of the representations of Owner contained in this
Agreement.
5.1.4. VIOLATION OF AGREEMENT. Neither the execution and
delivery of this Agreement by Owner nor Owner's performance of its
obligations hereunder will result in a violation or
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breach of any term or provision or constitute a default or accelerate
the performance required under any other agreement or document to which
Owner is a party or is otherwise bound, and will not constitute a
violation of any law, ruling, regulation or order to which Owner is
subject.
ARTICLE 6.
OWNER'S DEFAULT
6.1. Owner shall be deemed to be in default under this Agreement (a
"Default"), if Owner fails in the performance of or compliance with any of the
covenants, agreements, terms or conditions contained in this Agreement and such
failure shall continue for a period of thirty (30) days after written notice
thereof from Participant to Owner specifying in detail the nature of such
failure, or, in the case such failure cannot with due diligence be cured within
such period of thirty (30) days, if Owner fails to proceed promptly and with all
due diligence to cure the same and thereafter to prosecute the curing of such
failure with all due diligence [it being intended that in connection with a
failure not susceptible of being cured with due diligence within thirty (30)
days that the time within which to cure the same shall be extended for such
period as may be necessary to complete the same with all due diligence, but in
no event shall the time be extended for more than ninety (90) days].
ARTICLE 7.
REMEDIES
7.1. PARTICIPANT'S REMEDIES. Upon the occurrence of a Default by
Owner which is not cured within the time permitted, Participant shall be
entitled to:
7.1.1. Specific performance of Owner's obligations hereunder
and injunctive relief, as applicable, under the laws of Colorado;
7.1.2. Demand payment of all amounts due Participant under
the terms of this Agreement and demand the payment of all costs, actual
damages (not consequential or punitive), expenses and reasonable
attorneys' fees of Participant due to Owner's Default; and
7.1.3. Remedy any Default of Owner, and in connection with
such remedy, Participant may pay all expenses and employ counsel, and
all sums so expended or obligations incurred by Participant in
connection therewith shall be paid by Owner to Participant, upon demand
by Participant, and on failure of such reimbursement, Participant may,
at Participant's option, deduct all costs and expenses incurred in
connection with remedying a Default of Owner from the next sums
subsequently becoming due to Owner from Participant under the terms of
this Agreement.
No remedy granted to Participant is intended to be exclusive of any
other remedy herein or by law provided, but each shall be cumulative and shall
be in addition to every other remedy given hereunder to now or hereafter
existing at law, in equity or by statute. No delay or omission of Participant to
exercise any right or power accruing upon any Event of Default shall impair
Participant's exercise of any right or power or shall be construed to be a
waiver of any Event of
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Default or acquiescence therein.
ARTICLE 8.
OFFSET AT TERMINATION
8.1. Upon termination, all sums owed by either party to the other
shall be paid within thirty (30) days or later if such termination is a result
of the termination of the Employment Agreement. Any sums due to the Participant
hereunder may be offset against amounts that the Participant may owe Owner as a
result of the Employment Agreement, provided, however, Owner may not offset sums
due to Participant hereunder against the outstanding principal balance of the
Note (as defined in the Employment Agreement) prior to its maturity.
ARTICLE 9.
RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS
9.1. NO PARTNERSHIP OR JOINT VENTURE. Nothing contained herein
shall be deemed or construed by the parties hereto or by any third party as
creating the relationship of (i) a partnership, or (ii) a joint venture between
the parties hereto; it being understood and agreed that neither any provisions
contained herein nor any acts of the parties hereto shall be deemed to create
any relationship between the parties hereto other than the relationship of Owner
and Participant, as set forth herein.
9.2. FURTHER ACTIONS. Owner and Participant agree to execute all
contracts, agreements and documents and to take all actions necessary to comply
with the provisions of this Agreement and the intent hereof; provided, however,
in no event shall Participant be entitled to place or cause to be placed any
liens on the Property without Owner's prior consent.
9.3. NOT RESPONSIBLE FOR OTHER'S COMMITMENTS. Neither party shall
be responsible or liable for any indebtedness or obligation of the other party
incurred either before or after the execution of this Agreement, except as to
those joint responsibilities, liabilities, indebtedness or obligations incurred
pursuant to the terms of this Agreement, and each party agrees to indemnify and
hold the other party harmless from such obligations and indebtedness.
ARTICLE 10.
MISCELLANEOUS
10.1. NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and addressed as
shown below, or to such other address as the party concerned may substitute by
written notice to the other, and (i) delivered personally, or (ii) sent by
certified or registered mail, return receipt requested, postage prepaid,
addressed as shown below, or to such other address as the party concerned may
substitute by written notice to the other. All notices personally delivered or
sent by overnight courier shall be deemed received on the date of delivery. All
notices forwarded by certified or registered mail shall be deemed received on a
date five (5) days (excluding Saturdays, Sundays and holidays upon which the
United States Postal Service does not deliver mail) immediately following date
of deposit in the mail. Provided,
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however, the return receipt indicating the date upon which all notices were
received shall be PRIMA FACIE evidence that such notices were received on the
date on the return receipt.
If to Owner: Atlantic Gulf Communities Corporation
0000 X. Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: President
With copies to:
---------------
Atlantic Gulf Communities Corporation
0000 X. Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: General Counsel
If to Participant: Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
With copies to:
---------------
Xxxxxx X. Xxxxxx, Esquire
Xxxxxx Law Firm, P.C.
P. O. Xxx 00000
Xxxxxx Xxxx Xxxxxx, XX 00000-0000
The addresses and addressees may be changed by giving notice of such
change in the manner provided herein for giving notice. Unless and until such
written notice is received, the last address and addressee given shall be deemed
to continue in effect for all purposes. No notice to either Owner or Participant
shall be deemed given or received unless the entity noted "With a copy to" is
simultaneously delivered notice in the same manner as any notice given to either
Owner or Participant.
10.2. ASSIGNMENT. This Agreement and any documents executed in
connection therewith shall not be assigned by Participant or Owner without the
prior written consent of the other party, and any assignment without such prior
written consent shall be null and void. Merger of consolidation of Owner shall
not be deemed an assignment, provided that the merged or consolidated entity
assumes the obligations hereunder.
10.3. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of (i) this
Agreement, and (ii) all other documents and instruments to be executed and
delivered in accordance herewith, and shall continue in full force and effect.
10.4. OUTSIDE BUSINESSES. Nothing contained in this Agreement shall
be construed to restrict or prevent, in any manner, any party or any party's
affiliates, parent corporations or representatives or principals from engaging
in any other businesses or investments.
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10.5. CONSTRUCTION AND INTERPRETATION OF AGREEMENT. This Agreement
shall be governed by and construed under the laws of the State of Colorado. Any
action brought to enforce or interpret this Agreement shall be brought in the
court of appropriate jurisdiction in the county in which the Property is
located. Should any provision of this Agreement require judicial interpretation,
it is agreed that the court interpreting or considering same shall not apply the
presumption that the terms hereof shall be more strictly construed against a
party by reason of the rule or conclusion that a document should be construed
more strictly against the party who itself or through its agent prepared the
same; it being agreed that all parties hereto have participated in the
preparation of this Agreement and that legal counsel was consulted by each
responsible party before the execution of this Agreement.
10.6. SPECIFIC PERFORMANCE. Participant and Owner agree that in
addition to all other remedies, each of their obligations contained herein shall
be subject to the remedy of specific performance by appropriate action commenced
by the aggrieved party in a court of proper jurisdiction.
10.7. AMENDMENT AND WAIVER. This Agreement may not be amended or
modified in any way except by an instrument in writing executed by all parties
hereto; provided, however, either Participant or Owner may, in writing, (i)
extend the time for performance of any of the obligations of the other, (ii)
waive any inaccuracies and representations by the other contained in this
Agreement, (iii) waive compliance by the other with any of the covenants
contained in this Agreement, and (iv) waive the satisfaction of any condition
that is precedent to the performance by the party so waiving of any of its
obligations under this Agreement.
10.8. SEVERABILITY. Except as expressly provided to the contrary
herein, each section, part, term or provision of this Agreement shall be
considered severable, and if for any reason any section, part, term or provision
herein is determined to be invalid and contrary to or in conflict with any
existing or future law or regulation by a court or agency having valid
jurisdiction, such determination shall not impair the operation of or have any
other affect on other sections, parts, terms or provisions of this Agreement as
may remain otherwise intelligible, and the latter shall continue to be given
full force and effect and bind the parties hereto, and said invalid sections,
parts, terms or provisions shall not be deemed to be a part of this Agreement.
10.9. BINDING CONTRACT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, where permitted.
10.10. INTEGRATED AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and there are no agreements,
understandings, warranties or representations between the parties other than
those set forth herein.
10.11. GOVERNING DOCUMENT. This Agreement shall govern in the event
of any inconsistency between this Agreement and any of the Exhibits attached
hereto.
10.12. JURY TRIAL. The Participant and Owner hereby waive their
respective rights to a jury trial.
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10.13. ATTORNEY'S FEES. In the event it becomes necessary for either
party to litigate or to initiate any claim or proceeding in order to enforce its
rights under the terms of this Agreement, then the prevailing party shall be
entitled to reimbursement of its costs and reasonable attorney's fees incurred
in any such claim, proceeding or litigation, including those caused by appellate
proceedings.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
OWNER:
ATLANTIC GULF COMMUNITIES
CORPORATION, a Delaware corporation
By:
Its:
PARTICIPANT:
XXXXXXX X. XXXXXXX
8
EXHIBIT "A"
REAL PROPERTY
Legal descriptions of certain land owned by the Development Company in
Garfield County, Colorado.
EXHIBIT "B"
DEFINITIONS
All capitalized terms referenced or used in the Participation Agreement
to which this Exhibit is attached and not specifically defined therein shall
have the meaning set forth below in this EXHIBIT "B", which is attached to and
made a part of the Participation Agreement for all purposes. The section,
paragraph and exhibit references herein refer to the Sections, Paragraphs and
Exhibits in and to the Participation Agreement.
1.1. CAPITAL RESERVE. The term "Capital Reserve" shall mean those
amounts established by Owner to be allocated to an account for capital
replacements, renewals, nonroutine repairs, maintenance and improvements within
and to the Property.
1.2. COMMENCEMENT DATE. The term "Commencement Date" is defined as
the date upon which Owner and Participant execute this Agreement.
1.3. DEFAULT OR EVENT OF DEFAULT. The terms "Default" or "Event of
Default" shall have the meaning set forth in Article 6.
1.4. EXPENSES. The term "Expenses" shall mean all expenses incurred
by or paid on behalf of Development Company, computed on a cash basis, incurred
during or after the first calendar month beginning on or after the Commencement
Date in connection with all business related to or from the development,
construction, marketing, management, operation and sale of the Project and the
Property, and shall include, but shall not be limited to, the following items:
1.4.1. General and administrative salaries, wages,
commissions, employee benefits and payroll expenses, including payroll
taxes, approved profit sharing plans and insurance for employees
employed in the development, construction, marketing management,
operation or sale of the Property;
1.4.2. All architectural, design, consulting, engineering and
legal fees;
1.4.3. All costs of permitting, platting, and other licensing
as may be required to accomplish the proposed development of the
Property;
1.4.4. All predevelopment and development costs, construction
costs, including, but not limited to, any invoices submitted by
contractors, subcontractors, laborers and suppliers, including costs of
payment and performance bonds;
1.4.5. Marketing, advertising and promotional expenses;
1.4.6. Replacement of inventories of maintenance parts and
supplies;
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1.4.7. Reasonable reserves for warranty work;
1.4.8. Replacement of equipment;
1.4.9. General and administrative office supplies, postage,
printing, routine office, departmental and administrative expenses and
costs and accounting services incurred in the on-site development,
construction, management, operation and sale of the Property;
1.4.10. Reasonable travel expenses of on-site employees and
off-site consultants incurred in connection with Property business;
1.4.11. A credit to a reserve for appropriate insurance
coverage and taxes each calendar month in an amount or at a rate that
is sufficient to pay such insurance premiums and taxes when they become
due and payable;
1.4.12. Insurance premiums and taxes, to the extent not paid
from the reserve established therefor;
1.4.13. The amount credited to the Capital Reserve, as defined
herein;
1.4.14. All release of lien and financing costs for any loans
associated with the Property and all principal and interest payments
and fees due under any loan concerning the Property or construction of
the Improvements;
1.4.15. Any amounts retained for purposes of maintaining the
Working Capital at the level provided for herein;
1.4.16. Auditing costs, accounting costs, computer fees and
legal fees incurred in respect to the marketing, management,
development, operation and sale of the Property;
1.4.17. All capital costs incurred in the operation,
development and sale of the Property, including the construction and
equipping of any Improvements; provided, however, said costs shall
first be charged against the balance in the Capital Reserve;
1.4.18. Costs incurred for development, connection or use of
utilities, including, but not limited to, all electric, gas, waste
disposal and water costs, and any other utility charges payable by
Participant hereunder;
1.4.19. Ordinary maintenance and repairs to the Property.
1.4.20. Accounts receivable previously included within Gross
Receipts, to the extent they remain unpaid ninety (90) days after the
first billing;
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1.4.21. Any charges pursuant to any other lease, contract or
agreement related to the development, construction, management,
marketing, operation or sale of the Property, or purchase agreement for
replacement of furniture, fixtures and equipment;
1.4.22. Any Negative Cash Flow deficit carried forward from
previous Calendar Year;
1.4.23. Costs incurred in the cleanup and/or restoration of
the Property in compliance with any environmental, hazardous substance
or solid waste laws or regulations;
1.4.24. Costs incurred in the collection of any condemnation
proceeds relating to the Property;
1.4.25. Costs incurred in the restoration of the Property in
connection with an insurable loss;
1.4.26. Repayment of Owner's equity investment in the project
(and any other investment from future participants invested in the
Project and not distributed to Owner), together with a fifteen percent
(15%) per annum return on any such investment; and
1.4.27. Other expenses reasonably incurred in the development,
construction, management, marketing, operation and sale of the
Property.
Any of the above provisions resulting in a double deduction as an
Expense shall be allowed as a deduction only once. Expenses shall not include
depreciation, but shall include the Project's allocable share of federal income
taxes and all state income taxes.
1.5. FINANCIAL STATEMENTS. The term "Financial Statements" shall
mean a balance sheet as of the close of a calendar year, statements of income
and expense and Positive Net Cash Flow for that portion of the year then ended,
applied on basis consistent with that of the preceding period, or containing
disclosure of the effect on the financial position or results of operations of
any change during the period, and certified as accurate by an executive officer
of Owner.
1.6. GROSS RECEIPTS. The term "Gross Receipts" shall mean receipts
recognized during or after the first calendar month beginning on or after the
Commencement Date from all business conducted by Development Company upon,
related to or from the development, construction, marketing, management,
operation and sale or other disposition of the Property or the Real Property
during the Term hereof, and shall include, but shall not be limited to, proceeds
from the sale of lots, or any other portion of the Real Property, or any
proceeds from usage rights or leases of the Real Property, or for services
performed on, at, or from the Property, and proceeds paid as a result of an
insurable loss in connection with the Real Property or the Property. Gross
Receipts shall be reduced by any refunds, rebates, discounts and credits of a
similar nature given, paid or returned by Owner and/or Development Company in
the course of obtaining such Gross Receipts.
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Notwithstanding anything to the contrary, Gross Receipts shall not
include applicable gross receipts taxes, transfer fees, or similar governmental
charges collected directly from any purchasers as a part of the sales price of
any Property sold.
Any of the above provisions resulting in a double exclusion from Gross
Receipts shall be allowed as an exclusion only once.
1.7. NEGATIVE NET CASH FLOW. The term "Negative Net Cash Flow"
shall be defined as the amount, if any, by which Expenses exceed Gross Receipts
for the particular period in question.
1.8. NET PROFITS. The term "Net Profits" shall mean net pre-tax
income from the Project, subject to the conditions set forth below, as
determined at the end of each calendar year in accordance with generally
accepted accounting principles. The conditions are as follows: (i) Owner shall
be entitled to a fifteen percent (15%) per annum return on any funds for the
Project funded by Owner and/or Development Company (and any other equity
investment in the Project from future participants which remains invested in the
Project shall be entitled to a fifteen percent (15%) per annum return), (ii) all
non-capitalized expenditures shall be treated as an expense for purposes of
determining "Net Profits" at the time of such calculation, and (iii) Owner may
establish reasonable reserves for the operation and development of the Project.
Attached to this Exhibit "B" as Schedule 1 is proforma profit and loss statement
which is an example of how Net Profits are to be computed.
1.9. POSITIVE NET CASH FLOW. The term "Positive Net Cash Flow"
shall mean that amount, if any, by which the sum of Gross Receipts exceed
Expenses for the particular period in question.
1.10. WORKING CAPITAL. The term "Working Capital" shall mean the
initial sum of working capital and such additional amount as reasonably required
for the operation of the Property, which sum shall be periodically designated by
Owner to meet the requirements of the operation of the Property.
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