FORM OF EMPLOYMENT AGREEMENT
by and among
Affordable Residential Communities Inc.,
ARC Management Services, Inc.
and
Xxxxx X. Xxxxxxx
FORM OF EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made this day of
February, 2004, by and among Affordable Residential Communities Inc., a
Maryland corporation (the "Company") and ARC Management Services, Inc., a
Delaware corporation ("ARC Management") and Xxxxx X. Xxxxxxx ("Executive").
WHEREAS, the Company, ARC Management and the Executive desire to enter
into an agreement relating to the employment of the Executive by the Company and
ARC Management, which employment shall commence (the "Commencement Date") as of
the consummation of the initial underwritten public offering of shares of common
stock of the Company (the "Initial Public Offering");
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive has and can continue to contribute significantly to the
growth and success of the Company and its subsidiaries (including ARC
Management) and desires to provide for the employment of the Executive and to
encourage the attention and dedication to the Company and its subsidiaries of
the Executive as a member of management, in the best interests of the Company
and its shareholders;
WHEREAS, the Executive is willing to commit himself to serve the
Company and ARC Management on the terms and conditions herein provided; and
WHEREAS, the Company and ARC Management wish to employ Executive upon
the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the Company, ARC Management and
Executive agree as follows:
1. Employment. The Company and ARC Management hereby agree to employ
the Executive, and the Executive hereby accepts such employment, on the terms
and conditions hereinafter set forth. This Agreement shall become effective only
upon the consummation of the Initial Public Offering, and in the event the
Initial Public Offering does not occur, this Agreement shall be null and void
and of no force or effect.
2. Term. The period of employment of the Executive by the Company and
ARC Management hereunder shall commence on the Commencement Date, and shall
continue in effect through the third anniversary of such date unless further
extended as provided in this Section 2 or sooner terminated as provided in
Section 7. Commencing on the first anniversary of the Commencement Date, and on
each successive anniversary thereafter, the contract term of the Executive's
employment shall be automatically extended for one (1) additional year unless,
not later than the date which is sixty (60) days prior to such anniversary, the
Company shall have delivered to the Execu-
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tive or the Executive shall have delivered to the Company a written notice that
the term of the Executive's employment hereunder will not be extended (the
initial term, as it may be so extended, the "Employment Period").
3. Position and Duties. During the Employment Period, the Executive
shall serve as the Chief Executive Officer of the Company. The Executive's
responsibilities and authority shall include such responsibilities and authority
as may from time to time be assigned to the Executive by the Board and shall be
consistent with the Executive's title, position and stature with the Company.
The Executive agrees to devote substantially all of his business time and
efforts to the performance of his duties for the Company. Notwithstanding
anything to the contrary contained in this Agreement, and except as provided
below, the parties agree that nothing shall prohibit Executive from continuing
to own and operate the respective businesses and properties of each of Global
Mobile Limited Liability Company ("Global Mobile") and JJ&T Enterprises, Inc.
("JJ&T" and, together with Global Mobile, the "Xxxxxxx Companies") as currently
conducted (including making improvements, enhancements and refurbishment to, and
refinancing their properties). Until the dissolution, liquidation or winding up
of the Company, or, if earlier, the date on which the covenants contained in
Section 11(a) of this Agreement shall have expired (the "Restricted Period"),
Executive shall devote no more time and effort to managing the businesses of the
Xxxxxxx Companies than is consistent with current practice. For the duration of
the Restricted Period, neither of the Xxxxxxx Companies shall (a) admit any
additional members, owners, partners, shareholders or other investors, (b) raise
any additional equity capital from outside third parties, (c) invest in or
acquire, directly or indirectly, additional mobile home parks or manufactured
home communities or raw land for the development of mobile home parks or
manufactured home communities ("Properties").
4. Place of Performance. In connection with the Executive's employment
by the Company, the Executive shall be based in Denver, Colorado, except for
required travel on the Company's business.
5. Compensation and Related Matters.
(a) Base Salary. As compensation for the performance by the
Executive of his obligations hereunder, during the Employment Period, the
Company shall pay the Executive a base salary at the rate of five hundred
thousand dollars ($500,000) per annum, which amount may be increased from time
to time during the Employment Period by the Board in its sole discretion ("Base
Salary"). Base Salary shall be paid in approximately equal installments in
accordance with the Company's customary payroll practices.
(b) Bonuses. During the Employment Period, the Executive shall be
eligible to participate in the Company's Management Incentive Plan (or any
successor or substitute bonus or incentive plan) and to receive such annual
performance bonus (the "Bonus") pursuant to such plan as may be awarded to him
by the compensation committee of the Board in its sole discretion.
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(c) Expenses. The Company shall promptly reimburse the Executive
for all reasonable business expenses incurred during the Employment Period by
the Executive in performing services hereunder, including all travel expenses
and all living expenses while traveling on business or at the request of and in
the service of the Company (or any subsidiary of the Company as contemplated by
Section 6 below), provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
(d) Other Benefits. The Executive shall be entitled to participate
in all of the employee compensation, welfare and benefit plans and arrangements
(including any vacation policy or program) made available by the Company to its
similarly situated executive officers, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans and arrangements.
6. Offices. Subject to Sections 3 and 4 hereof, the Executive agrees to
serve without additional compensation, if elected or appointed thereto, as a
director of the Company and/or any subsidiary of the Company, as a member of any
committee of the board of directors of any of such companies, and/or in one or
more executive management positions with any of the Company's subsidiaries or
affiliates, provided that the Executive shall be indemnified for serving in any
and all such capacities on a basis no less favorable than is currently provided
to any other director of the Company or any of its subsidiaries or any such
executive management position, as the case may be.
7. Termination. The Executive's employment hereunder (and the
Employment Period) may be terminated as follows:
(a) Death. The Executive's employment hereunder (and the Employment
Period) shall terminate upon his death.
(b) Disability. If, as a result of the Executive's incapacity due
to physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for the entire period of six (6)
consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8 hereof) is given shall not have returned to
the performance of his duties hereunder on a full-time basis, the Company may
terminate the Executive's employment hereunder (and the Employment Period) for
"Disability." In the event of any dispute under this paragraph, the Executive
agrees to submit to a physical or mental examination by a licensed physician
selected by the Company and to be bound by the Company's decision based on the
results thereof.
(c) Cause. The Company may terminate the Executive's employment
hereunder (and the Employment Period) for Cause. For purposes of this Agreement,
the Company shall have "Cause" to terminate the Executive's employment
arrangement hereunder upon (i) the willful and continued failure by the
Executive to substantially perform the Executive's duties with the Company
(other than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good
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Reason by the Executive pursuant to Section 7(d) hereof) that has not been cured
within thirty (30) days after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies
the manner in which the Board believes that the Executive has not substantially
performed the Executive's duties, (ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company or its
subsidiaries or affiliates, monetarily or otherwise or (iii) the Executive's
conviction of, or entry by the Executive of a guilty or no contest plea to, a
felony under any laws of the U.S. or any state thereof. For purposes of clauses
(i) and (ii) of this definition, no act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
act, or failure to act, was in the best interest of the Company.
(d) Good Reason. The Executive may terminate his employment
hereunder (and the Employment Period) for "Good Reason." "Good Reason" for
termination by the Executive of the Executive's employment shall mean:
(i) any material breach by the Company of its
obligations hereunder which is not cured within thirty (30) days
following the receipt by the Company of notice of such material
breach from the Executive;
(ii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof; for
purposes of this Agreement, no such purported termination shall be
effective; or
(iii) a substantial reduction in Base Salary or in the
aggregate opportunity of the Executive to participate in the
Company's incentive compensation and other employee welfare and
benefit plans from that provided to the Executive as of the
Commencement Date.
The Executive's continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder; provided, however, that the Executive shall
be required to provide a Notice of Termination within ninety (90) days following
the occurrence of any event alleged by the Executive to constitute Good Reason
for the termination of his employment hereunder. The Executive's right to
terminate the Executive's employment for Good Reason shall not be affected by
the Executive's incapacity due to physical or mental illness.
(e) Without Cause by the Company; Without Good Reason by the
Executive. The Company may terminate the Executive's employment hereunder (and
the Employment Period) at any time without Cause upon thirty (30) days prior
written notice to the Executive. The Executive may terminate the Executive's
employment (and the Employment Period) voluntarily for any reason or no reason
at any time by giving thirty (30) days prior written notice to the Company.
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(f) Change in Control. A "Change in Control" shall be deemed to
have occurred if an event set forth in any one of the following paragraphs shall
have occurred:
(i) any Person is or becomes the Beneficial Owner (as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act")), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or any of its Affiliates)
representing 50% or more of the combined voting power of the
Company's then outstanding securities; provided, however, that the
following shall not constitute an "acquisition" by any Person for
purposes of this Section 7(f)(i): an acquisition of the Company's
securities by the Company which causes the Company's voting
securities beneficially owned by a Person to represent 50% or more
of the combined voting power of the Company's then outstanding
securities; provided, further, however, that if a Person shall
become the beneficial owner of 50% or more of the combined voting
power of the Company's then outstanding securities by reason of
share acquisitions by the Company as described above and shall,
after such share acquisitions by the Company, become the beneficial
owner of any additional voting securities of the Company, then such
acquisition shall constitute a Change in Control; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving on
the Board: individuals who, on the date hereof, constitute the
Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved or recommended
by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so
approved or recommended; or;
(iii) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company
with any other corporation, other than a merger or consolidation
immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the
Board, the entity surviving such merger or consolidation or, if the
Company or the entity surviving such merger is then a subsidiary,
the ultimate parent thereof; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company
of all or substantially all of the Company's assets, other than (A)
a sale or disposition by the Company of all or substantially all of
the Company's assets to an entity, at least 60% of the
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combined voting power of the voting securities of which are owned
by stockholders of the Company following the completion of such
transaction in substantially the same proportions as their
ownership of the Company immediately prior to such sale or (B)
other than a sale or disposition by the Company of all or
substantially all of the Company's assets immediately following
which the individuals who comprise the Board immediately prior
thereto constitute at least a majority of the board of directors of
the entity to which such assets are sold or disposed or, if such
entity is a subsidiary, or the ultimate parent thereof.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions. For purposes
of this Section 7(f), "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination pursuant
to Section 7(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 12. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall, if
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated. Further, a Notice of Termination for Cause is required
to include a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds (2/3) of the entire membership of the Board (excluding the
Executive) at a meeting of the Board which was called and held for the purpose
of considering such termination (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the Executive was engaged in the conduct set forth in clause (i) or (ii) of the
definition of Cause herein, and specifying the particulars thereof in detail.
(b) Date of Termination. "Date of Termination" shall mean (i) if
the Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated for Disability pursuant to
Section 7(b), thirty (30)
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days after the date of delivery of Notice of Termination (provided that the
Executive shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period), (iii) if the Executive's
employment is terminated for Cause pursuant to Section 7(c), the date specified
in the Notice of Termination, which shall not be earlier than thirty (30) days
after the date of delivery of the Notice of Termination and (iv) if the
Executive's employment is terminated for any other reason, the date on which a
Notice of Termination is given or any later date (within thirty (30) days
following the date on which such Notice of Termination is delivered) set forth
in such Notice of Termination.
9. Compensation upon Termination or During Disability. The Executive
hereby agrees that no severance compensation of any kind, nature or amount shall
be payable to the Executive except as expressly set forth in this Section 9, and
except for such payments, the Executive hereby irrevocably waives any claim for
severance compensation.
(a) Disability; Death. During any period that the Executive fails
to perform his duties hereunder as a result of his Disability, the Executive
shall continue to receive his full Base Salary at the rate in effect at the
beginning of such period and continue as a participant in all compensation and
benefit plans in which the Executive was participating pursuant to Sections 5(b)
and 5(d) until his employment is terminated pursuant to Section 7(a) or Section
7(b). Following the termination of the Executive's employment due to Disability
or death, the Company shall:
(i) pay to the Executive any accrued but unused
vacation pay (the "Unpaid Vacation Amounts").
(ii) pay to the Executive an amount equal to the
product of (x) the sum of (I) the Executive's then current Base
Salary and (II) the average annual cash bonus earned by the
Executive pursuant to the Annual Incentive Bonus Plan (or any
successor or substitute bonus plan) during the three fiscal years
immediately prior to the fiscal year in which the Date of
Termination occurs (or, if three fiscal years have not elapsed from
the Commencement Date through the Date of Termination, average
annual cash bonus so earned by the Executive for the number of full
fiscal years elapsed from the Commencement Date through the Date of
Termination; or, if no full fiscal years have elapsed during such
period, the Executive's target annual bonus for the year in which
the Date of Termination occurs) (such sum of (I) and (II), the
"Severance Payment") and (y) two (2), paid in installments at such
times as Executive would normally receive payroll checks as though
employed by the Company through the severance payment period.
(iii) provide for the full vesting of any equity
incentive awards then held by the Executive to the extent unvested
as of the Date of Termination.
(iv) pay to the Executive a pro rata portion to the
Date of Termination of the value of the Executive's bonus for the
fiscal year in which
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the Date of Termination occurs under the Annual Incentive Bonus
Plan (or any successor or substitute bonus plan), calculated by
multiplying the award that the Executive would have earned on the
last day of such fiscal year, assuming achievement at target level
of all performance goals established with respect to such bonus, by
a fraction, the numerator of which is the number of days elapsed
from the commencement of the fiscal year in which occurs the Date
of Termination and the denominator of which is 365 (the "Pro Rata
Bonus").
(v) for a period of one (1) year in the case of the
Executive's death or two (2) years in the case of the Executive's
Disability, provide the Executive with an opportunity to elect
continued coverage under the Company's group health plans in
accordance with Section 4980B of the Internal Revenue Code of 1986,
and the Company shall bear the cost of such coverage; provided,
however, that, in the case of Disability, benefits otherwise due to
the Executive pursuant to this Section 9(a)(v) shall be reduced to
the extent benefits of the same type are received by or made
available to the Executive during the Benefit Coverage Period by a
subsequent employer ("Health Benefit Coverage").
(b) By the Company without Cause or by the Executive for Good
Reason. If during the Employment Period the Executive's employment is terminated
(x) by the Company other than for Cause or Disability or (y) by the Executive
for Good Reason, the Company shall:
(i) Continue to pay and otherwise provide to the
Executive, during any notice period (not to exceed thirty (30)
days), all compensation, Base Salary and previously accrued but
unpaid Bonuses (if any) and shall continue to allow the Executive
to participate in any welfare benefit plans in accordance with the
terms of such plans.
(ii) pay to the Executive the Unpaid Vacation Amounts.
(iii) pay to the Executive an amount equal to the
product of (x) the Severance Payment and (y) two (2), paid in
installments at such times as Executive would normally receive
payroll checks as though employed by the Company through the
severance payment period.
(iv) pay to the Executive the Pro Rata Bonus.
(v) provide the Health Benefit Coverage for a period
of two (2) years following the Date of Termination.
Notwithstanding the foregoing, the Company's obligation to provide
the Executive the payments and benefits described in this Section 9(b) shall
cease as of the date the Executive breaches any of the provisions of Section 11
hereof.
(c) Tax Gross-Up. If any of the payments or benefits received or to
be received by the Executive (including any payment or benefits received in
connection with a Change in Control or the Executive's termination of employment
9
whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement (all such payments and benefits, excluding the Gross-Up Payment,
being hereinafter referred to as the "Total Payments") will be subject to any
excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Excise Tax"), the Company shall pay to the Executive an additional
amount (the "Gross Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, and after taking into account the phase out of itemized
deductions and personal exemptions attributable to the Gross-Up Payment, shall
be equal to the Total Payments.
(d) By the Company for Cause or by the Executive other than for
Good Reason. If the Executive's employment shall be terminated by the Company
for Cause or by the Executive other than for Good Reason, then the Company shall
pay the Executive his Base Salary (at the rate in effect at the time Notice of
Termination is given) through the Date of Termination, and the Company shall
have no additional obligations to the Executive under this Agreement except as
set forth in subsection (e) of this Section 9.
(e) Compensation Plans. Following any termination of the
Executive's employment, the Company shall pay the Executive all accrued but
unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination under any compensation plan or benefit plan or program of the
Company, at the time such payments are due, in any event, in accordance with the
terms of such plans or programs.
(f) Return of Company Property. Executive agrees that following the
termination of his employment for any reason, he shall return all property of
the Company, its subsidiaries, affiliates and any divisions thereof he may have
managed which is then in or thereafter comes into his possession, including, but
not limited to, documents, contracts, agreements, plans, photographs, books,
notes, electronically stored data and all copies of the foregoing as well as any
automobile or other materials or equipment supplied by the Company to Executive,
if any.
10. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for the Executive by seeking other employment or
otherwise. However, the amount of any payment or benefit provided for the
Executive hereunder shall be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company or
otherwise.
11. Confidential Information; Noncompetition; etc.
(a) Non-Competition. The Executive acknowledges and agrees that the
Executive's duties under this Agreement qualify the Executive as "executive and
management personnel" under Colorado Revised Statute Section 8-2-113(2)(d). The
Executive further acknowledges that, during the course of the Executive's
employment, the Executive will gain knowledge of "trade secrets" - as such term
is used
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under Colorado Revised Statute Section 8-2-113(2)(b) - of the Company and its
subsidiaries and affiliates. Accordingly, the Executive acknowledges and agrees
that the restrictive covenants are valid under Colorado Revised Statute Section
8-2-113, and are temporally and geographically reasonable.
In that regard, during the Employment Period and for a period of
twenty four (24) months following the termination of the Executive's employment
for any reason (including without limitation upon the expiration of the
Employment Period) and provided that the Company has paid to the Executive any
and all severance amounts, if any, due to Executive under Section 9 hereof, the
Executive shall not engage in Competition (as hereinafter defined) with the
Company or any of its subsidiaries or affiliates; provided, however, that the
Executive may perform services for JJ&T and Global Mobile, subject to the terms
of Section 3 hereof, and JJ&T and Global Mobile may engage in activities
expressly permitted by Section 3 hereof. For purposes of this Agreement,
"Competition" by the Executive shall mean the Executive's engaging in, or
otherwise directly or indirectly being employed by or acting as a consultant to,
or being a director, officer, employee, principal, agent, stockholder, member,
owner or partner of, or permitting his name to be used in connection with the
activities of any other business or organization where any aspect of the
business of the Company or any of its subsidiaries is conducted, or planned to
be conducted, as of the date of this Agreement or as of the date of termination
of the Executive's employment, anywhere within the United States, which business
activity is the same as or competitive with the Company or any of its
subsidiaries as the same may be conducted from time to time.
Notwithstanding anything to the contrary contained herein, direct
or indirect "beneficial ownership" by the Executive, either individually or as a
member of a "group," as such terms are used in Rule 13d of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, of not more
than five percent (5%) of the voting stock of any publicly held corporation
shall not alone constitute a violation of this Section 11(a).
(b) Non-Solicitation. In addition to the restriction contained in
Section 11(a), except as otherwise provided in the last paragraph of this
Section 11(b), for a period of twenty four (24) months following the termination
of Executive's employment for any reason (including without limitation upon the
expiration of the Employment Period) and provided that the Company has paid to
the Executive any and all severance amounts, if any, due under Section 9 hereof,
Executive agrees that he will not, directly or indirectly, for his benefit or
for the benefit of any other person, firm or entity, solicit the employment or
services of, or hire or engage, any person who was known to be employed or
engaged by the Company or its subsidiaries or affiliates as of the date of
Executive's termination of employment or who was known to be employed or engaged
by the Company or its subsidiaries or affiliates during the six-month period
immediately preceding the Executive's termination of employment.
The covenants contained in this Section 11(b) shall be null and
void and of no force or effect with respect to any termination of the
Executive's employment occurring on or following a Change in Control.
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(c) Confidentiality. Executive acknowledges that information
pertaining to the prior or current business of the Company or any of its
subsidiaries or contemplated business of the Company or any of its subsidiaries
and its customers (including without limitation information relating to the
Company's subsidiaries, affiliates and predecessors and their respective
customers and information relating to entities with which the Company or its
subsidiaries or affiliates has communicated with respect to a possible
acquisition or material investment) constitutes valuable and confidential assets
of the Company, and Executive acknowledges that the unauthorized use or
disclosure of such information would be detrimental to the business of the
Company and its subsidiaries. Without limitation of the foregoing, Executive
agrees that the following types of information are confidential:
(i) information pertaining to any customer of the
Company or its subsidiaries or affiliates, including information
relating to the prior, current or future research or development
activities of any customer, or relating to other business
activities of any customer;
(ii) information, conclusions and developments
resulting from work performed, and all methods and procedures
relating to work performed, or to be performed, for the Company or
its subsidiaries or affiliates or any customer;
(iii) information, conclusions and developments
resulting from, and all methods and procedures relating to prior,
current or contemplated projects and products of the Company or its
subsidiaries or affiliates;
(iv) information, conclusions and developments,
resulting from work performed, or to be performed, pertaining to
any entity with which the Company or its subsidiaries or affiliates
has communicated during the Employment Period concerning a possible
acquisition of, or material investment in, such entity; and
(v) information which the Executive has a reasonable
basis to know was accepted by the Company or its subsidiaries or
affiliates from any third party under an obligation of
confidentiality.
The Executive shall, during the Employment Period and thereafter,
hold and preserve all confidential information of the Company or its
subsidiaries or affiliates and of its customers in trust and confidence for the
Company and for its customers, and shall not, without the express written
approval of an officer of the Company, disclose any such confidential
information to any unauthorized person or use or copy any such confidential
information for other than the Company's business, either during, or after
termination of, employment by the Company. The Executive shall not disclose to
the Company or its subsidiaries or affiliates, or induce the Company or its
subsidiaries or affiliates to use, any confidential information belonging to
others, without authorization from such other parties. Specifically excluded
from the above confidentiality provisions is any information which becomes
available to the public other than through the unauthorized disclosure by the
Executive.
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(d) Non-Disparagement. During the Employment Period and for a
period of twenty four (24) months following the termination of the Executive's
employment for any reason (including without limitation upon the expiration of
the Employment Period), the Executive will not intentionally make, or cause to
be made, any statement, observation or opinion disparaging the business or
reputation of the Company or the Company's officers, directors or employees.
Nothing contained in this Section 11(d) shall preclude the Executive from
providing truthful testimony in response to a valid subpoena, court order,
regulatory request or other legal process.
(e) Injunctive Relief. The Executive agrees that any breach or
threatened breach of subsections (a), (b), (c) or (d) of this Section 11 would
result in irreparable injury and damage to the Company and its subsidiaries and
affiliates for which the Company and its subsidiaries and affiliates would have
no adequate remedy at law. Executive therefore also agrees that in the event of
said breach or any reasonable threat of breach, the Company shall be entitled to
seek an immediate injunction and restraining order to prevent such breach and/or
threatened breach and/or continued breach by the Executive and/or any and all
persons and/or entities acting for and/or with the Executive. The terms of this
paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including, but not limited
to, remedies available under this Agreement and the recovery of damages. The
parties hereto further agree that the provisions of the covenant not to compete
are reasonable. Should a court or arbitrator determine, however, that any
provision of the covenant not to compete is unreasonable, either in period of
time, geographical area, or otherwise, the parties hereto agree that the
covenant shall be interpreted and enforced to the maximum extent which such
court or arbitrator deems reasonable.
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12. Successors; Notice.
(a) Company's Successors. 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 and/or ARC
Management to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company and/or ARC Management would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as he would be entitled to hereunder if the Company had terminated his
employment other than for Cause, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets (or, if applicable, the business and/or assets of ARC Management) as
aforesaid which executes and delivers the agreement provided for in this Section
12 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) Executive's Successors. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate. The services to be performed by the Executive hereunder are specific to
the Executive and may not be assigned by the Executive.
(c) Notice. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
if to the Executive, at the Executive's most recent
address shown in the records of the Company; and
If to the Company or ARC Management, to:
Affordable Residential Communities Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
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or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designated by its Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or 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. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. This Agreement shall be binding on all successors to the Company. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Colorado without regard to its conflicts
of law principles. All references to sections of the Exchange Act shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the Company and the Executive under this Section 13 and Sections
8, 9, 10, 11 and 12 hereof shall survive the expiration of the term of this
Agreement. The compensation and benefits payable to the Executive under this
Agreement shall be in lieu of any other severance benefits to which the
Executive may otherwise be entitled upon his termination of employment under any
severance plan, program, policy or arrangement of the Company or ARC Management.
14. Withholding. Any amounts payable or property transferred pursuant
to this Agreement shall be subject to applicable tax withholding, and the
Company may require a cash payment with respect to such obligations as a
condition of any such payment or transfer of property.
15. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Right of First Refusal in Disposition of Properties.
(a) Right of First Refusal Notice. If, at any time during the
Employment Period, the Executive proposes to sell, transfer or otherwise dispose
of to any Person (a "Disposition Proposal") one or more Properties owned,
directly or indirectly (including Properties owned, directly or indirectly, by
the Xxxxxxx Companies), by the Executive (any such Property, a "Disposition
Property"), the Executive shall, before completing such sale, transfer or other
disposition, provide a written notice (the "Right of First Refusal Notice") of
such Disposition Proposal to the Company, in the
15
manner provided in Section 12(c) of this Agreement, containing the information
described in paragraph (b) below.
(b) Company Right of First Refusal. The Right of First Refusal
Notice shall specify, with respect to the Disposition Proposal, the purchaser,
each Disposition Property, the proposed aggregate purchase price for the
Disposition Properties (the "Disposition Purchase Price") and all other terms
and conditions of the Disposition Proposal, and shall include an offer to sell
all the Disposition Properties to the Company (i) at a price equal to 95.0% of
the Disposition Purchase Price, and (ii) otherwise on terms and conditions
substantially identical to the terms and conditions of the Disposition Proposal.
(c) Exercise of Right of First Refusal. The Company shall have the
right and option, within fifteen (15) days after the date the Right of First
Refusal Notice is received by the Company, to accept irrevocably such offer as
to all, but not less than all, of the Disposition Properties set forth in the
Right of First Refusal Notice by providing the Executive with written notice,
within such 15-day period, in the manner provided in Section 12(c) of this
Agreement (the "Company Notice"), of the Company's acceptance of the offer set
forth in the Right of First Refusal Notice. If the Company does not provide a
Company Notice to the Executive within such 15-day period, the Company shall be
deemed to have irrevocably waived its rights under this Section 17 to acquire
the Disposition Properties described in the Right of First Refusal Notice.
(d) Consummation of Acquisition Pursuant to Right of First Refusal.
If the Company, pursuant to the Company Notice, accepts such offer to purchase
all of the Disposition Properties, the Company and the Executive shall close the
sale of the Disposition Properties within forty-five (45) days after receipt of
the Company Notice by the Executive, subject to any applicable waiting period
prescribed by law, rule or regulation.
(e) No Assignment of Right of First Refusal. The Company may not
assign its rights under this Section 17.
(f) Definitions. For purposes of this Section 17, "Person" shall
have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries or (ii) the Executive or any
member of his immediate family or any company or entity all of the equity
interests of which are owned by the Executive and/or any member of his immediate
family.
18. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
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IN WITNESS WHEREOF, the parties have executed this Agreement the date
first above written.
AFFORDABLE RESIDENTIAL COMMUNITIES INC.
By: __________________________________
ARC MANAGEMENT SERVICES INC.
By: __________________________________
--------------------------------------
Xxxxx X. Xxxxxxx
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