SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: NOVEMBER 17, 1997
-----------------
ATLANTIC GULF COMMUNITIES CORPORATION
-------------------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-8967 59-0720444
- -------- ------ ----------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2601 South Bayshore Drive, Miami, Florida 33133
- --------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone No., Including Area Code: (305) 859-4000
<PAGE>
ITEM 5 - OTHER EVENTS.
The summaries set forth below of the employment agreements between
Atlantic Gulf Communities Corporation (the "Company") and each of J. Larry
Rutherford, John Laguardia and Thomas W. Jeffrey are qualified in their entirety
by reference to the full text of the agreements, which are included hereto as
Exhibits 10(iii). 30, 31 and 32 respectfully.
J. LARRY RUTHERFORD'S EMPLOYMENT AGREEMENT.
On November 17, 1997, the Company and J. Larry Rutherford entered into
an employment agreement, effective as of July 1, 1997, and on November 26, 1997
an amendment to the employment agreement (together the "Rutherford Employment
Agreement"), under which Mr. Rutherford will continue to serve as President and
Chief Executive Officer of the Company until December 31, 2000, unless
terminated prior to such date pursuant to the agreement. Since 1991 Mr.
Rutherford has served as the Company's President and Chief Executive Officer.
The Rutherford Employment Agreement provides that Mr. Rutherford will receive a
salary at the annual rate of $450,000 through December 31, 1998. Mr.
Rutherford's salary will be subject to review at least annually beginning
January 1, 1999 and may be increased in the sole discretion of the Company's
board of directors (the "Board"). In addition, Mr. Rutherford will be entitled
to receive certain bonuses. Upon execution of the Rutherford Employment
Agreement, Mr. Rutherford received a bonus of $206,000 for the period from
January 1, 1997 through June 30, 1997. Also, he will be eligible to receive a
bonus of $200,000 for the period from July 1, 1997 through December 31, 1997;
50% of the bonus will be subject to the Company's achievement of certain
pre-determined objectives and 50% will be determined in the Board's sole
discretion. From January 1, 1998 through December 31, 2000, Mr. Rutherford will
be eligible to receive an annual bonus of up to $600,000; 25% of the bonus will
be determined in the Board's sole discretion and 75% upon the Company's
achievement of certain pre-determined objectives. The bonus will be payable 50%
in cash and 50% in the Company's common stock (the "Common Stock") valued at
fair market value as of the date of payment, provided that the payment of 50% of
the bonus in Common Stock is approved by the Company's stockholders by a
majority of the total votes cast. Unless and until such approval is obtained,
the bonus will be payable 100% in cash. If such approval is obtained before
March 15, 1999, the payment of 50% of the bonus in Common Stock will commence
with the bonus for the 1998 bonus period. The Company will make a loan to Mr.
Rutherford in the amount of the federal income taxes required to be withheld by
the Company with respect to the portion of his annual bonus payable in Common
Stock. The loan will be evidenced by a recourse promissory note secured by the
Common Stock granted to Mr. Rutherford as part of such bonus. Such loan will
accrue interest at the prime rate published in THE WALL STREET JOURNAL from time
to time ("WSJ Prime Rate"), payable monthly in arrears, and will mature one year
from the date of the loan. In addition, Mr. Rutherford will be entitled to
participate in all employee welfare or benefit plans offered by the Company to
its executives.
2
<PAGE>
On and since June 24, 1997, the Company has issued certain warrants to
purchase up to approximately 8,550,000 shares of Common Stock at an exercise
price of $5.75 per share (the "Warrants"). The exercise price of the Warrants is
subject to certain adjustments, including a downward adjustment by March 31,
1999 to the extent that the Company does not achieve certain operating cash flow
targets cumulatively for 1997 and 1998. If in respect of the above-mentioned
operating cash flow targets there is no reduction in the exercise price of the
Warrants, Mr. Rutherford will receive from the Company a payment of $250,000
(the "Warrant Reset Incentive"), payable 50% in cash and 50% in Common Stock
valued at fair market value as of the date of payment, provided that the payment
of 50% of the Warrant Reset Incentive in Common Stock is approved by the
Company's stockholders by a majority of the total votes cast. Unless such
approval is obtained, the Warrant Reset Incentive will be payable 100% in cash.
Also, pursuant to action by the Board's Compensation Committee on
November 17, 1997, Mr. Rutherford has been granted options to purchase up to
3,000,000 shares of Common Stock subject to a certain Stock Incentive Plan and
Agreement dated as of November 17, 1997 (the "Rutherford Stock Incentive
Agreement"). The options will not be exercisable until the date on which the
Rutherford Stock Incentive Agreement is approved by a majority vote of the
Company's stockholders. The exercise price of the stock options will be the
closing price of the Common Stock on the date of stockholders' approval of the
Rutherford Stock Incentive Agreement. Subject to stockholders' approval of such
agreement, options to purchase 750,000 shares of Common Stock will be
exercisable on the date of stockholders' approval and on December 31, 1998, 1999
and 2000. The options will expire on the seventh anniversary of the date they
were granted unless forfeited on an earlier date. The options will become
immediately fully exercisable if a "change in control" (as defined in the
Rutherford Stock Incentive Agreement) occurs or a committee of outside directors
appointed by the Board or the Board gives notice cancelling, effective on the
date of consummation of certain major corporate transactions (specified in the
Rutherford Stock Incentive Agreement), any option that remains unexercised on
such date. If the stockholders do not approve the Rutherford Stock Incentive
Agreement before September 30, 1998, the options will become null and void and
Mr. Rutherford may terminate the Rutherford Employment Agreement.
In addition to the stock options, as soon as practicable after
stockholders' approval of the Rutherford Stock Incentive Agreement, Mr.
Rutherford has agreed to purchase from the Company Common Stock having a value
as of the date on which the shares are purchased equal to $1,000,000, provided
that such purchase is approved by the Company's stockholders by a majority of
the total votes cast. Subject to any applicable margin requirements, the Company
has agreed to make loans to Mr. Rutherford for the full amount of the purchase
price. Such loans will be secured by the Common Stock purchased by Mr.
Rutherford with the proceeds of such loans. Up to $400,000 of such loans will be
recourse, and up to $600,000 of such loans will be non-recourse. The loans will
have a term of five years, payable in annual installments of interest only. The
loans will accrue interest at the WSJ Prime Rate. The loans will become due and
payable in full upon the termination by the
3
<PAGE>
Company for "cause" of Mr. Rutherford's employment or the termination by Mr.
Rutherford of his employment with the Company. Mr. Rutherford has agreed to
execute any lock-up agreements to refrain from selling or transferring his
securities in the event of a request by an underwriter in connection with an
underwritten public offering of any of the Company's securities.
The Company will have the right in its discretion, upon notice, to
terminate Mr. Rutherford's employment for "cause" (as defined in the Rutherford
Employment Agreement). Upon termination for cause, the Company will pay to Mr.
Rutherford any accrued and earned but unpaid salary to the date of termination
and incentive compensation for any bonus period ending on or before the date of
termination of employment. Any and all unexercisable and/or unexercised stock
options as of the date of such termination will be forfeited and terminated five
business days after the date of termination. The Company will have the right in
its discretion, upon notice, to terminate Mr. Rutherford's employment without
cause. Upon such termination, the Company will pay to Mr. Rutherford any accrued
and earned but unpaid salary to the date of termination, incentive compensation
for any bonus period ending on or before the date of termination, and his salary
until the earlier of the date which is two years from the date of termination or
December 31, 2000. Any stock options that have not become exercisable prior to
the date of such termination will become immediately exercisable. Any and all
unexercised stock options will be forfeited and terminated 90 days after the
date employment is terminated without cause.
Mr. Rutherford will have the right, upon 60 days' notice, to terminate
his employment with the Company. If the stockholders do not approve the
Rutherford Stock Incentive Agreement, Mr. Rutherford may terminate his
employment for "good reason" at any time before October 15, 1998. Upon such
termination, the Company will pay to Mr. Rutherford any accrued and earned but
unpaid salary through the effective date of termination and incentive
compensation for any bonus period ending on or before the date of termination.
In addition, to the extent incentive compensation would have been payable (based
on satisfaction of predetermined objectives) to Mr. Rutherford for the bonus
period in which he terminates his employment for good reason, the Company will
pay to Mr. Rutherford a pro rata share of the incentive compensation earned for
the bonus period in which his employment terminates. Upon termination by Mr.
Rutherford other than for good reason, the Company will pay to him any accrued
and earned but unpaid base salary through the effective date of termination and
incentive compensation for any bonus period ending on or before the termination
of his employment. Any and all unexercisable and/or unexercised stock option as
of the termination will be forfeited and terminated 30 days after the date of
such termination of employment.
While Mr. Rutherford is employed by the Company and unless his
employment is terminated by the Company without cause or he terminates his
employment for good reason, for a period of two years after termination of his
employment, Mr. Rutherford will not engage in, or have any interest in any
entity that engages in, competition with the Company; except
4
<PAGE>
that the foregoing will not apply to Mr. Rutherford's ownership of Common Stock
or the acquisition, solely as an investment, of publicly traded securities of
any issuer so long as Mr. Rutherford does not control, individually or as a
member of a group, more than 5% of any class of stock of such corporation. In
addition, Mr. Rutherford has agreed not to solicit the Company's employees and
clients for a period of two years after termination of his employment.
JOHN LAGUARDIA'S EMPLOYMENT AGREEMENT.
On November 19, 1997, John Laguardia and the Company entered into an
employment agreement effective November 17, 1997 (the "Laguardia Employment
Agreement"), under which Mr. Laguardia will serve as the Executive Vice
President - Chief Operating Officer of the Company until November 17, 2001,
unless terminated prior to such date pursuant to the agreement. The Laguardia
Employment Agreement provides that Mr. Laguardia will receive a salary at the
annual rate of $300,000. In addition, Mr. Laguardia will be eligible to receive
an annual bonus of up to 100% of his base salary based upon his and the
Company's performance. The annual bonus will be payable 50% in cash and, at the
Company's option, 50% in Common Stock based on the closing price on the day
immediately before the date of the payment of the bonus. To the extent that any
portion of the bonus is paid in Common Stock, the Company will make a loan (the
"Stock Loan") to Mr. Laguardia in an amount equal to the federal income tax
imposed on the issuance of such Common Stock based on the highest marginal tax
bracket imposed on Mr. Laguardia. The Stock Loan will be evidenced by a
non-recourse promissory note secured by the Common Stock issued to Mr. Laguardia
as part of such bonus. Such loan will accrue interest at the WSJ Prime Rate,
payable monthly in arrears, and will mature one year from the date of the note.
The note will allow Mr. Laguardia to pay the note in full at any time by
tendering to the holder of the note the Common Stock securing the note. In
addition, Mr. Laguardia will be entitled to certain fringe benefits and
perquisites as provided to any of the Company's senior executives.
Pursuant to action by the Board's Compensation Committee on November
17, 1997, Mr. Laguardia has been granted options to purchase up to 450,000
shares of Common Stock subject to a certain Stock Option Plan and Agreement
dated November 17, 1997 (the "Laguardia Stock Option Agreement"). The options
will not be exercisable until the Laguardia Stock Option Agreement is approved
by a majority vote of the Company's stockholders. The exercise price of the
stock options will be the closing price of the Common Stock on the date of
stockholders' approval. Subject to stockholders' approval of the agreement,
options to purchase 150,000 shares of Common Stock will be exercisable on each
of the following dates: the date of stockholders' approval, June 30, 1998 and
June 30, 1999. The options will become immediately fully exercisable if a
"change in control" (as defined in the Laguardia Stock Option Agreement) occurs
or a committee of outside directors appointed by the Board or the Board gives
notice cancelling, effective on the date of consummation of certain major
corporate transactions (specified in the Laguardia Stock Option Agreement), any
option that remains unexercised on such date. The options will expire on the
seventh
5
<PAGE>
anniversary of the applicable exercisability date unless forfeited on an earlier
date. If the stockholders do not approve the Laguardia Stock Option Agreement
before September 30, 1998, the options will become null and void and Mr.
Laguardia will have the right on or before December 31, 1998 to terminate his
employment. In the event of such termination, the Company will pay to Mr.
Laguardia any bonus or salary earned but unpaid and a lump sum severance
compensation in the amount of $300,000, within 30 days following the date of
termination.
The Company will pay to Mr. Laguardia certain relocation expenses and
benefits. The Company will reimburse Mr. Laguardia for costs not to exceed
$2,000 per month (the "Rental Expense") to rent an apartment in Miami, Florida
(the "Leased Premises") until March 31, 1998. The Company will pay all out of
pocket carrying costs of Mr. Laguardia's residence in Orlando, Florida (the
"Residence"), not to exceed $4,500 per month (the "Home Expenses"), until the
earlier of the sale of the Residence or March 31, 1999. Under certain
circumstances, the Company will purchase the Residence from Mr. Laguardia. If
Mr. Laguardia purchases a residence in Dade or Broward County, Florida before
the earlier of the sale of the Residence or March 31, 1999, the Company has
agreed to make a loan (the "Relocation Loan") to Mr. Laguardia in an amount
equal to $700,000 less the outstanding balance of any existing mortgage on the
Residence. The Relocation Loan will be evidenced by a non-recourse promissory
note secured by a second mortgage on the Residence or the new residence.
Interest on the loan will accrue at the WSJ Prime Rate and will be payable
monthly in arrears and the loan will mature on the sale of the Residence. The
Company will reimburse Mr. Laguardia for the costs of moving his personalty (the
"Moving Expenses").
The Company may, upon notice, terminate Mr. Laguardia's employment for
"cause" (as defined in the Laguardia Employment Agreement). In such event, Mr.
Laguardia will not be entitled to any further salary, bonus or benefits and any
and all unexercisable and/or unexercised stock options as of the date of
termination will be forfeited and terminated five business days after the date
of termination of employment. The Company may, upon 60 days' notice, terminate
Mr. Laguardia's employment without cause. If the Company substantially
diminishes Mr. Laguardia's duties or responsibilities or materially changes his
position or title, Mr. Laguardia may consent to such action or terminate his
employment with 60 days' notice, which termination will be deemed to be without
cause. Upon termination by the Company without cause, Mr. Laguardia will be
entitled to receive: any bonus or base salary earned but unpaid; lump sum
severance compensation in the amount of $300,000; certain fringe benefits; and
the assumption or payment by the Company of certain lease obligations related to
Mr. Laguardia's rental of an apartment in Miami, Florida. Any and all
unexercised stock options will be forfeited and terminated 90 days after the
date employment is terminated without cause.
Mr. Laguardia may, upon 60 days' notice, terminate his employment with
the Company. In such event (except for Mr. Laguardia's termination as a result
of the Company having substantially diminished his duties or responsibilities or
materially changed his position
6
<PAGE>
or title), Mr. Laguardia will not be entitled to any further compensation, bonus
or severance benefits and any and all unexercisable and/or unexercised stock
options will be forfeited and terminated 30 days after the date of such
termination of employment.
During the term of Mr. Laguardia's employment with the Company, Mr.
Laguardia will not, other than as an employee of the Company or any of its
subsidiaries or affiliates, engage in an active way in real estate development
or sales within Florida or engage as a passive investor in real estate
development or sales in competition with the Company or any of its subsidiaries
or affiliates. Mr. Laguardia may be a passive investor in a company which will
buy, rehabilitate and sell single family homes in central Florida and the
Company has agreed that such activity is not in competition with the Company
provided that Mr. Laguardia is not an employee of such company. In addition, Mr.
Laguardia has agreed not to solicit the Company's employees for a period of 180
days after termination of his employment.
To the extent that the Stock Loan, the Company's payment of the Rental
Expenses, Home Expenses or Moving Expenses, or the Relocation Loan are taxable
to Mr. Laguardia, the Company will pay to Mr. Laguardia the "gross up" amounts
necessary to pay all income taxes on such compensation so that the total of such
payments and reimbursements will be revenue neutral after taxes to Mr.
Laguardia.
The Laguardia Employment Agreement provides that the Company will
indemnify Mr. Laguardia in all suits or proceedings relating to or arising out
of conduct or actions in his capacity as an officer or employee of the Company
to the fullest extent permitted by the Company's certificate of incorporation
and by-laws and section 145 of the Delaware General Corporation Law including
the right to have the Company pay in advance Mr. Laguardia's attorney's fees and
other expenses.
THOMAS W. JEFFREY'S EMPLOYMENT AGREEMENT.
On November 17, 1997, the Company and Thomas W. Jeffrey have entered
into an employment agreement, effective as of July 1, 1997 (the "Jeffrey
Employment Agreement"), under which Mr. Jeffrey will continue to serve as the
Executive Vice President Chief Financial Officer of the Company until June 30,
1999, unless terminated prior to such date pursuant to the agreement. Mr.
Jeffrey has served as an Executive Vice President and Chief Financial Officer of
the Company since 1994. The Jeffrey Employment Agreement provides that Mr.
Jeffrey will receive a salary at the annual rate of $200,000 until December 31,
1997, and after January 1, 1998 at the annual rate of $225,000. In addition, Mr.
Jeffrey will be eligible to receive an annual bonus of up to 50% of his salary,
based upon his and the Company's performance. Mr. Jeffrey received $90,000 upon
execution of the Jeffrey Employment Agreement, which amount will be applied
against the performance bonus for the year ending December 31, 1997. In
addition, Mr. Jeffrey will be entitle to certain fringe benefits and perquisites
as provided to any of the Company's senior executives.
7
<PAGE>
Pursuant to action by the Board's Compensation Committee on November
17, 1997 and the Company's Employee Stock Option Plan (the "Existing Stock
Option Plan"), Mr. Jeffrey has been granted options to purchase up to 50,000
shares of Common Stock subject to a certain Existing Plan Stock Option Agreement
dated November 17, 1997 (the "Jeffrey Existing Plan Stock Option Agreement").
The exercise price of the stock options granted under the Existing Stock Option
Plan and the Jeffrey Existing Plan Stock Option Agreement will be $4.3125 per
share, which is equal to the fair market value of the Common Stock on the date
of grant. Options to purchase 16,667 shares of Common Stock became or will be
exercisable on each of the following dates: November 17, 1997, June 30, 1998 and
June 30, 1999. Such options will expire on the seventh anniversary of the date
they were granted, unless forfeited on an earlier date.
Also, pursuant to action by the Board's Compensation Committee on
November 17, 1997, Mr. Jeffrey has been granted options to purchase up to
200,000 shares of Common Stock subject to a certain New Stock Option Plan and
Agreement dated November 17, 1997 (the "Jeffrey New Stock Option Agreement").
The options under the Jeffrey New Stock Option Agreement will not be exercisable
until the date on which such agreement is approved by a majority vote of the
Company's stockholders. The exercise price of the stock options granted under
the Jeffrey New Stock Option Agreement will be the closing price of the Common
Stock on the date on which such agreement is approved by the Company's
stockholders. Subject to stockholders' approval of the agreement, options to
purchase 66,667 shares will be exercisable on each of the date of stockholders'
approval and June 30, 1998 and options to purchase 66,666 shares will be
exercisable on June 30, 1999. Such options will expire on the seventh
anniversary of the date they were granted, unless forfeited on an earlier date.
If the stockholders do not approve the Jeffrey Stock Option Agreement before
September 30, 1998, the options will become null and void and Mr. Jeffrey may
terminate the Jeffrey Employment Agreement.
The options granted under the Jeffrey Existing Plan Stock Option
Agreement and under the Jeffrey New Stock Option Agreement will become
immediately fully exercisable if a "change in control" (as defined in such
agreements) occurs or a committee of outside directors appointed by the Board or
the Board gives 30 days' notice cancelling, effective on the date of
consummation of certain major corporate transactions (specified in such
agreements), any option that remains unexercised on such date.
The Company may, upon notice, terminate Mr. Jeffrey's employment for
"cause" (as defined in the Jeffrey Employment Agreement). In such event, Mr.
Jeffrey will not be entitled to any further salary, bonus or benefits and any
and all unexercisable and/or unexercised stock options as of the date of
termination will be forfeited and terminated five business days after the date
of termination of employment. The Company may, upon 60 days' notice, terminate
Mr. Jeffrey's employment other than for cause. Upon such termination, Mr.
Jeffrey will be entitled to receive: any bonus earned but unpaid; severance
compensation at the annual rate of $225,000 for 12 months after the effective
date of termination; and certain
8
<PAGE>
fringe benefits for certain periods. Any and all unexercised stock options will
be forfeited and terminated 90 days after the date employment is terminated
other than for cause.
Mr. Jeffrey may, upon 90 days' notice, terminate his employment with
the Company. In such event, Mr. Jeffrey will not be entitled to any further
compensation, bonus or severance benefits and any and all unexercisable and/or
unexercised stock options will be forfeited and terminated 30 days after the
date of such termination of employment. If the stockholders do not approve the
Jeffrey New Stock Option Agreement before September 30, 1998, Mr. Jeffrey may
terminate his employment for "good reason" prior to the earlier of 15 days
following disapproval by the stockholders or October 15, 1998. Upon such
termination, the Company will pay to Mr. Jeffrey any accrued but unpaid salary
through the date of termination and any accrued and earned but unpaid
performance bonus. In addition, to the extent a performance bonus would have
been payable (based on satisfaction of predetermined objectives) to Mr. Jeffrey
for the bonus period in which he terminates his employment for good reason, the
Company will pay to Mr. Jeffrey a pro rata share of the performance bonus earned
for the bonus period in which his employment terminates. Further, any and all
unexercisable and/or unexercised stock options under the Existing Stock Option
Plan and the Jeffrey Existing Plan Stock Option Agreement as of the termination
will be forfeited and terminated 30 days after the date of such termination of
employment.
During the term of Mr. Jeffrey's employment with the Company, Mr.
Jeffrey will not, other than as an employee of the Company or any of its
subsidiaries or affiliates, engage in an active way in real estate development
or sales within Florida or engage as a passive investor in real estate
development or sales in competition with the Company or any of its subsidiaries
or affiliates. In addition, Mr. Jeffrey has agreed not to solicit the Company's
employees for a period of 180 days after termination of his employment.
The Jeffrey Employment Agreement provides that the Company will
indemnify Mr. Jeffrey in all suits or proceedings relating to or arising out of
conduct or actions in his capacity as an officer or employee of the Company to
the fullest extent permitted by the Company's certificate of incorporation and
bylaws and section 145 of the Delaware General Corporation Law including the
right to have the Company pay in advance Mr. Jeffrey's attorney's fees and other
expenses.
ITEM 7(C) - EXHIBITS.
10 (iii). Certain management contracts, compensatory plans, contracts or
arrangements
30. Employment Agreement dated November 17, 1997, effective July 1,
1997, between Atlantic Gulf Communities Corporation and J. Larry
Rutherford, with form of Stock Incentive Plan and Agreement for
J. Larry Rutherford (Exhibit A thereto); Amendment to Employment
Agreement, dated November 26, 1997.
9
<PAGE>
31. Employment Agreement dated November 19, 1997, effective November
17, 1997, between Atlantic Gulf Communities Corporation and John
Laguardia, with form of Stock Option Plan and Agreement for John
Laguardia (Exhibit A thereto).
32. Employment Agreement dated November 17, 1997, effective July 1,
1997, between Atlantic Gulf Communities Corporation and Thomas W
Jeffrey, with form of Existing Plan Stock Option Agreement for
Thomas W. Jeffrey (Exhibit A thereto) and New Stock Option Plan
and Agreement for Thomas W. Jeffrey (Exhibit B thereto).
10
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATLANTIC GULF COMMUNITIES CORPORATION
Date: November 26, 1997 By: /s/ JOEL K. GOLDMAN
--------------------------------------
Joel K. Goldman
Vice President and General Counsel
11
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
this ___ day of _________, 1997, effective as of July 1, 1997, by and between
Atlantic Gulf Communities Corporation, a Delaware corporation with its principal
executive offices located in Miami, Florida (the "Company"), and J. Larry
Rutherford (hereinafter called the "Executive").
R E C I T A L S
A. The Executive is currently employed as the President and Chief
Executive Officer of the Company.
B. The Executive possesses intimate knowledge of the business,
properties, finances, projects and affairs of the Company, its policies, methods
and personnel.
C. The Board of Directors of the Company (the "Board") recognizes
that the Executive has contributed to the growth and success of the Company, and
desires to assure the Company of the Executive's continued employment and to
compensate him therefor.
D. The Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company,
for the benefit of the Company and its stockholders.
E. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants and agreements set forth herein, the parties agree as follows:
1. Employment.
----------
1.1 EMPLOYMENT. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to serve the Company on the terms and
conditions set forth herein.
1.2 DUTIES OF EXECUTIVE. During the term of this Agreement,
the Executive shall serve as the President and Chief Executive Officer of the
Company, in accordance with the by-laws
-1-
<PAGE>
of the Company (as in effect from time to time) and Delaware law, shall
diligently perform all services as may be assigned to him by the Board (provided
that, such services shall not materially differ in scope from the services
currently and previously provided by the Executive), and shall exercise such
power and authority as may from time to time be delegated to him by the Board.
The Executive shall devote his full time and attention to the business and
affairs of the Company, shall render such services to the best of his ability,
and shall use his best efforts to promote and advance the interests of the
Company.
2. TERM. The term of this Agreement, and the employment of the
Executive hereunder, shall commence on July 1, 1997 (the "Commencement Date")
and shall expire on December 31, 2000 (the "Expiration Date") unless sooner
terminated in accordance with the terms and conditions hereof (the "Term").
3. Compensation.
------------
3.1 Base Salary.
-----------
(a) During the period commencing on the
Commencement Date through December 31, 1997, the Executive shall receive a gross
base salary at the annual rate of Four Hundred Fifty Thousand Dollars
($450,000), payable in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes.
(b) From and after January 1, 1998, the
Executive shall receive a gross base salary at the annual rate of Four Hundred
Fifty Thousand Dollars ($450,000) (the "Base Salary"), payable in installments
consistent with the Company's normal payroll schedule, subject to applicable
withholding and other taxes. Beginning January 1, 1999, the Base Salary shall be
reviewed, at least annually, by the Board and may, by action and in the sole
discretion of the Board, be increased at any time or from time to time.
3.2 INCENTIVE COMPENSATION. In addition to Executive's Base
Salary, during the period this Agreement is in effect, the Executive shall be
entitled to receive the following bonuses (collectively, the "Incentive
Compensation"):
(a) A bonus equal to Two Hundred and Six
Thousand Dollars ($206,000), less applicable withholding taxes, shall be payable
to the Executive upon the execution of this Agreement. This bonus represents,
and shall be in full and complete satisfaction of, the bonus that the Executive
is entitled to receive for the period from January 1, 1997 through June 30,
1997. In addition, the Executive shall be eligible to receive a bonus equal to
Two Hundred Thousand Dollars ($200,000) for the period from the Commencement
Date through December 31, 1997, 50% of which shall be subject to the achievement
of the objectives set forth on Schedule 1, attached hereto, and 50% of which
shall be determined upon the Board's sole discretion. Such bonus, less
applicable withholding taxes, shall be payable on or before March 15, 1998.
-2-
<PAGE>
(b) From January 1, 1998 through the Expiration
Date (unless this Agreement is terminated prior to the Expiration Date) the
Executive shall be eligible to receive an annual bonus of up to Six Hundred
Thousand Dollars ($600,000) (the "Bonus"). Twenty-five percent (25%) of the
Bonus shall be payable upon the Board's sole discretion. Seventy-five percent
(75%) of the Bonus shall be payable solely upon the Company's achievement of the
objectives pre-determined by the Compensation Committee for the calendar year to
which such Bonus applies, which objectives shall be made known to the Executive
through a written notice no later than March 31st of each such calendar year.
The pre-determined objectives set by the Compensation Committee shall be based
upon any or all of the following business criteria for the Company, and/or
specified subsidiaries, and/or business units, or development projects of the
Company and/or specified subsidiaries: (1) net cash flow; (2) net pre-tax or net
after-tax earnings; (3) earnings before interest expense, taxes, depreciation
and amortization; (4) earnings per share; (5) return on equity; (6) return on
capital; (7) return on investment; (8) ratio of debt to stockholder's equity;
and (9) total stockholder return (or total stockholder return as compared to
total return (on a comparable basis) of a publicly available index such as, but
not limited to, the Standard & Poor's 500 Stock Index. Pursuant to Section
162(m) of the Internal Revenue Code, the Compensation Committee shall determine
if the Executive has met the pre-determined objectives. The Bonus shall be
payable on or before March 15th of each year following the year with respect to
which such Bonus shall be earned. Fifty percent (50%) of the Bonus, less
applicable withholding taxes, shall be paid to the Executive in the form of
shares of common stock of the Company, which shares shall be valued at their
fair market value as of the date of the payment. Fifty percent (50%) of the
Bonus, shall be paid to the Executive in the form of cash. No fractional shares
of common stock shall be issued to the Executive hereunder, with any fractional
portion of a share settled in cash.
(c) The Company shall loan to the Executive the
amount of the federal income taxes required to be withheld by the Company with
respect to the portion of the Bonus that is payable to the Executive in the form
of common stock of the Company. The loan shall be evidenced by a recourse
promissory note secured by the shares of common stock granted to the Executive
as part of the Bonus. Interest on the loan shall accrue at the prime rate, as
published in the Wall Street Journal from time to time, and shall be payable
monthly in arrears. The full amount of the principal of the loan, together with
any accrued and unpaid interest, shall be payable one year from the date of the
loan.
Except as otherwise determined by the Compensation Committee, in its sole and
absolute discretion, the periods for which Incentive Compensation is payable
under this Section 3.2, sometimes hereinafter referred to as the Bonus Periods,
shall be the six (6) month period from July 1, to December 31, 1997, and each
calendar year thereafter.
3.3 COMPANY PERFORMANCE/WARRANT RESET INCENTIVE. In connection
with the common stock purchase warrants (the "Warrants") issued by the Company
to AP-AGC, LLC, a shareholder of the Company ("Apollo"), pursuant to those
certain Warrants for the purchase of common stock of Atlantic Gulf Communities
Corporation (the "Warrant Agreements"), in the event,
-3-
<PAGE>
and solely in the event, there is no reduction in the Exercise Price (as defined
in the Warrant Agreements) of any of the Warrants as of the Adjustment Date (as
defined in the Warrant Agreements) pursuant to Section 6 of the Warrant
Agreements, then the Executive shall receive from the Company a payment equal to
Two Hundred Fifty Thousand Dollars ($250,000) (the "Warrant Reset Incentive"),
which payment shall be made within ten (10) days of the date on which the final
determination is made as to whether, a reduction of the Exercise Price of the
Warrants is required pursuant to said Section 6. Fifty percent (50%) of the
Warrant Reset Incentive, less applicable withholding taxes, shall be paid to the
Executive in the form of shares of common stock of the Company, which shares
shall be valued at their fair market value as of the date of the payment. Fifty
percent (50%) of the Warrant Reset Incentive, less applicable withholding taxes,
shall be paid to the Executive in the form of cash. No fractional shares of
common stock shall be issued to the Executive hereunder, with any fractional
portion of a share settled in cash.
4. Expense Reimbursement and Other Benefits.
-----------------------------------------
4.1 Reimbursement of Expenses. During the term of Executive's
employment hereunder, upon the submission of proper substantiation by the
Executive (in the manner and form determined by the Company), and subject to
such rules and guidelines as the Company may from time to time adopt, the
Company shall reimburse the Executive for all reasonable and necessary expenses
actually paid or incurred by the Executive in the course of, and pursuant to,
the business of the Company. The Executive shall account to the Company in
writing for all expenses for which reimbursement is sought and shall supply to
the Company originals of all relevant invoices, receipts or other evidence
reasonably requested by the Company.
4.2 COMPENSATION/BENEFIT PROGRAMS. During the term of this
Agreement, the Executive shall be entitled to participate in all medical,
dental, hospitalization, accidental death and dismemberment, disability, travel
and life insurance plans, and any and all other employee welfare or benefit
plans as are presently and hereinafter offered by the Company to its executives,
including savings, pension, profit-sharing and deferred compensation plans,
subject to the general eligibility and participation provisions set forth in
such plans.
4.3 WORKING FACILITIES. The Company shall furnish the
Executive with an office, secretarial help and such other facilities and
services suitable to his position and adequate for the performance of his duties
hereunder.
4.4 Stock Options.
-------------
(a) Pursuant to the authorization and action by
the Compensation Committee on November 17, 1997, the Executive has been granted
options to purchase up to Three Million (3,000,000) shares of the Company's
common stock (the "Stock Options"), subject to the terms and conditions set
forth in the Stock Incentive Plan and Agreement dated November 17, 1997,
attached hereto as Exhibit "A" (the "Stock Incentive Plan and Agreement").
-4-
<PAGE>
(b) Notwithstanding anything to the contrary
contained herein, the Executive may not exercise his Stock Options at any time
prior to the date (the "Shareholder Approval Date") on which the Stock Incentive
Plan and Agreement is approved by a majority vote of the shareholders of the
Company, in satisfaction of Section 162(m) of the Internal Revenue Code. Subject
to the foregoing, the Executive's Stock Options shall become exercisable
according to the following schedule (provided the Executive's employment
hereunder has not been terminated prior to each "Exercisability Date") and
subject to such other terms as may be contained in the Stock Incentive Plan and
Agreement:
Number of Shares That Become
Exercisability Date Available for Purchase
------------------- ----------------------
Shareholder Approval Date 750,000
December 31, 1998 750,000
December 31, 1999 750,000
December 31, 2000 750,000
In the event the shareholders of the Company do not approve the Stock Incentive
Plan and Agreement, in accordance with Section 162(m) of the Internal Revenue
Code, prior to September 30, 1998, any Stock Options granted to the Executive,
pursuant to this Section 4.4, shall be deemed null and void AB INITIO, and the
Executive may terminate this Agreement for "Good Reason," as more fully set
forth in Section 5.5(b) hereof.
(c) The exercise price (the "Option Price") of
the Stock Options shall be the Fair Market Value, as determined under the Stock
Incentive Plan and Agreement, per share, of the common stock of the Company on
the Shareholder Approval Date. The Stock Options shall expire on the seventh
(7th) anniversary of the date of grant, unless the Stock Options shall be
forfeited on an earlier date, as set forth herein and under the Stock Incentive
Plan and Agreement. All other terms and conditions of the Stock Options shall be
as set forth in the Stock Incentive Plan and Agreement.
(d) Notwithstanding the above, any and all
unexercisable and/or unexercised Stock Options shall be forfeited, terminated
and deemed null and void on the dates set forth in Sections 5.1 through 5.5
hereof, as applicable, in the event the Executive's employment hereunder is
terminated pursuant to the applicable section hereof.
(e) (i) In the event that the Option Price
exceeds $5.75 per Share, then the Company shall pay to the Executive as deferred
compensation (the "Deferred Compensation"), in accordance with the Stock
Incentive Plan and Agreement attached as "Exhibit A", the following amounts:
(x) On July 1, 2001, an amount equal to
the product of 1,000,000
-5-
<PAGE>
multiplied by the lesser of (1) the Date of Grant Spread and (2) the Date of
Payment Spread on June 30, 2001;
(y) On July 1, 2002, an amount equal to
the product of 1,000,000 multiplied by the lesser of (1) the Date of Grant
Spread and (2) the Date of Payment Spread on June 30, 2002; and
(z) On July 1, 2003, an amount equal to
the product of 1,000,000 multiplied by the lesser of (1) the Date of Grant
Spread and (2) the Date of Payment Spread on June 30, 2003.
(ii) For purposes of this Agreement:
(x) the "Date of Grant Spread" shall
mean the amount, if any, by which (1) the average Fair Market Value of a Share
on each business day in the 30 day period ending on November 17, 1997 exceeds
(2) $5.75;
(y) the "Date of Payment Spread" as of
any date shall mean the amount, if any, by which (1) the Fair Market Value of a
Share on each business day within the 30 day period ending on that date exceeds
(2) $5.75;
(z) the terms "Fair Market Value" and
"Share" shall have those meanings set forth in the Stock Incentive Plan and
Agreement attached as Exhibit "A".
(iii) The Company shall make payment of the
amounts required under this Section 4.4(e) in cash or shares of the Company's
Common Stock, or any combination thereof as determined by the Board, less
applicable withholding taxes.
(iv) Notwithstanding anything to the contrary
contained herein, the Executive shall not receive any Deferred Compensation
pursuant to this Section 4.4(e) unless the Stock Incentive Plan and Agreement is
approved by a majority vote of the shareholders of the Company in satisfaction
of Section 162(m) of the Internal Revenue Code. In addition, no Deferred
Compensation shall be payable under this Section 4.4 after the date on which the
Executive's employment with the Company is terminated if the Company terminates
the Executive's employment for Cause pursuant to Section 5.1 or the Executive
terminates his employment with the Company pursuant to Section 5.5.
4.5 Financed Stock Purchase.
-----------------------
(a) In addition to the Stock Options provided
for in Section 4.4 above, and in accordance with the Stock Incentive Plan and
Agreement attached as "Exhibit A", the Company shall make loans to the Executive
(the "Loans") equal to the funds necessary for the purchase by the
-6-
<PAGE>
Executive of up to an aggregate of One Million Dollars ($1,000,000) worth of the
common stock of the Company, valued at fair market value on the date of
purchase. The Loans shall be secured by a pledge of the shares of common stock
purchased by the Executive. Up to Four Hundred Thousand Dollars ($400,000) of
the Loans shall be recourse loans as to the Executive, and up to Six Hundred
Thousand Dollars ($600,000) of the Loans shall be non-recourse as to the
Executive. The term of the Loans shall be for five (5) years, payable in annual
installments of interest only, with principal and unpaid interest payable on
maturity, and the interest rate of the Loans shall be the prime rate, as
published in the Wall Street Journal from time to time. In addition to other
customary events of default, the Loans shall become due and payable in full upon
(i) the termination by the Company of Executive's employment with the Company
hereunder for cause (as defined in Section 5.1 hereof), or (ii) the termination
by Executive of his employment with the Company hereunder. The terms and
conditions of all promissory notes evidencing the Loans, and the terms and
conditions of all pledge agreements evidencing the pledge of the shares of
common stock as security for the Loans, shall be in a form satisfactory to the
Company. Notwithstanding anything to the contrary contained herein, the
Executive may not purchase any stock pursuant to the provisions of the Section
4.5(a) for a nonrecourse note unless the Stock Incentive Plan and Agreement is
approved by a majority vote of the shareholders of the Company in satisfaction
of Section 162(m) of the Internal Revenue Code.
(b) The Executive agrees that, in the event an
underwriter requests the Company, in connection with an underwritten public
offering of any of its securities, to secure and obtain a lock-up agreement,
from any of the Company's stockholders, optionholders or employees, whereby each
stockholder, optionholder or employee agrees to refrain from selling,
transferring, pledging or otherwise conveying his securities for a certain
period (the "Lock-up"), the Executive shall execute and deliver to the Company a
Lock-up, in form and substance acceptable to the Company and the underwriters of
such offering, within ten (10) days of the receipt of a written request from the
Company.
4.6 OTHER BENEFITS. The Executive shall be entitled to four
(4) weeks of vacation each calendar year during the term of this Agreement, to
be taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by Executive
during any calendar year may not be carried forward into any succeeding calendar
year. The Executive shall not be entitled to cash in lieu of unused vacation
days. The Executive shall continue to receive the appropriate benefits currently
available to the Executive, under the terms, if any, as the Board of the Company
shall from time to time determine.
5. Termination.
-----------
5.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, in its sole and absolute discretion, upon written notice to the
Executive, to terminate the Executive's employment hereunder, for cause. For
purposes of this Agreement, the term "cause" shall mean:
-7-
<PAGE>
(i) an action or omission of the Executive which
constitutes a willful and material breach of this Agreement which is not cured
within fifteen (15) days after receipt by the Executive of written notice of
same,
(ii) fraud, embezzlement, misappropriation of
funds, breach of trust or any other dishonest and injurious conduct against the
Company, committed by the Executive,
(iii) conviction of the Executive with respect to
a felony or any other crime that involves moral turpitude, unless the conviction
is attributable to an act committed before the date of this Agreement and the
Company had actual knowledge of such act prior to its execution of this
Agreement,
(iv) from and after the date of this Agreement,
any act committed by the Executive involving the excess consumption of alcohol
or drugs, or any other acts of moral turpitude committed in such a manner as to
publicly and adversely reflect upon the reputation or stature of the Company,
(v) gross or continuing negligence in connection
with the performance of the Executive's duties hereunder, or
(vi) the material and willful or knowing failure
or refusal by the Executive, or the inability of the Executive (other than as a
result of a disability or death), to perform his duties hereunder, or in
accordance with the lawful written instructions of the Board of Directors.
Any termination for cause shall be made in writing to the Executive, which
notice shall set forth the acts or omissions upon which the Company is relying
for such termination. The Executive shall have the right to address the Board
regarding the acts set forth in the notice of termination. Upon any termination
pursuant to this Section 5.1, the Company shall (i) pay to the Executive any
accrued and earned but unpaid Base Salary to the date of termination and (ii)
pay to the Executive his accrued and earned but unpaid Incentive Compensation,
if any, for any Bonus Period ending on or before the date of the termination of
Executive's employment with the Company. Any and all unexercisable and/or
unexercised Stock Options as of the date of the Executive's termination under
this Section 5.1 shall be forfeited, terminated and deemed null and void five
(5) business days from the date of termination. The Company shall have no
further liability hereunder (other than for reimbursement for reasonable and
necessary business expenses incurred prior to the date of termination, subject,
however, to the provisions of Section 4.1). Upon any termination pursuant to
this Section 5.1, the Executive shall be deemed to have resigned as Chairman of
the Board of the Company, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter and to deliver such letter to
the Board.
5.2 DISABILITY. The Company shall at all times have the right,
upon written notice
-8-
<PAGE>
to the Executive, to terminate the Executive's employment hereunder, if the
Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform his obligations hereunder for a period of
180 days in any 12-month period. The Company shall have sole discretion based
upon competent medical advice to determine whether the Executive is or continues
to be, disabled. Upon any termination pursuant to this Section 5.2, the Company
shall (i) pay to the Executive any accrued and earned but unpaid Base Salary
through the effective date of termination specified in such notice, (ii) pay to
the Executive his accrued and earned but unpaid Incentive Compensation, if any,
for any Bonus Period ending on or before the date on which the Executive first
becomes disabled, and (iii) pay to the Executive his Base Salary, in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes, for six (6) months from the date on
which the Executive first becomes disabled, and (iv) pay to the Executive the
Deferred Compensation pursuant to Section 4.4(e). Any and all unexercisable
and/or unexercised Stock Options as of the Executive's termination under this
Section 5.2 shall be forfeited, terminated and deemed null and void ninety (90)
days from the date of termination. The Company shall have no further liability
hereunder, other than for (A) reimbursement for reasonable and necessary
business expenses incurred prior to the date of termination (subject, however to
the provisions of Section 4.1) and (B) any disability benefits provided to the
Executive by the Company pursuant to Section 4.2 hereof. Upon any termination
pursuant to this Section 5.2, the Executive shall be deemed to have resigned as
Chairman of the Board of the Company, and if required by the Board, the
Executive hereby agrees to immediately execute a resignation letter and to
deliver such letter to the Board.
5.3 DEATH. In the event of the death of the Executive during
the term of his employment hereunder, the Company shall (i) pay to the estate of
the deceased Executive any accrued and earned but unpaid Base Salary through the
Executive's date of death, (ii) pay to the estate of the deceased Executive his
accrued and earned but unpaid Incentive Compensation, if any, for any Bonus
Period ending on or before the Executive's date of death, and (iii) pay to the
estate of the deceased Executive, the Executive's Base Salary, in installments
consistent with the Company's normal payroll schedule, subject to applicable
withholding and other taxes, for six (6) months from the date of the Executive's
death, and (iv) pay to the Executive the Deferred Compensation pursuant to
Section 4.4(e). Any and all unexercisable and/or unexercised Stock Options as of
the date of the Executive's death shall be forfeited, terminated and deemed null
and void ninety (90) days from the date of the Executive's death. The Company
shall have no further liability hereunder other than for (A) reimbursement for
reasonable and necessary business expenses incurred prior to the date of the
Executive's death (subject, however to the provisions of Section 4.1) and (B)
any death or life insurance benefits provided to the Executive by the Company
pursuant to Section 4.2 hereof).
5.4 TERMINATION WITHOUT CAUSE. The Company shall at all times
have the right, in its sole and absolute discretion, upon written notice to the
Executive, to terminate the Executive's employment hereunder. Upon any
termination pursuant to this Section 5.4 (that is not a termination under any of
Sections 5.1, 5.2, 5.3, or 5.5), the Company shall (i) pay to the Executive any
accrued
-9-
<PAGE>
and earned but unpaid Base Salary through the effective date of termination
specified in such notice, (ii) pay to the Executive the accrued and earned but
unpaid Incentive Compensation, if any, for any Bonus Period ending on or before
the effective date of termination in such notice, and (iii) thereafter, pay to
the Executive his Base Salary, in installments consistent with the Company's
normal payroll schedule, subject to applicable withholding and other taxes,
until the earlier of (A) the date which is two (2) years from the date of the
Executive's termination, or (B) the Expiration Date, and (iv) pay to the
Executive the Deferred Compensation pursuant to Section 4.4(e). Further, any
Stock Options that have not become exercisable prior to the date of the
Executive's termination shall become immediately exercisable upon the
termination by the Company of Executive's employment under this Section 5.4
prior to the Expiration Date. Any and all unexercised Stock Options shall be
forfeited, terminated and deemed null and void ninety (90) days from the date on
which the Executive's employment with the Company terminates. The Company shall
have no further liability hereunder (other than for reimbursement for reasonable
and necessary business expenses incurred prior to the date of termination,
subject, however, to the provisions of Section 4.1). Upon any termination
pursuant to this Section 5.4, the Executive shall be deemed to have resigned as
Chairman of the Board of the Company, and if required by the Board, the
Executive hereby agrees to immediately execute a resignation letter and to
deliver such letter to the Board.
5.5 Termination by Executive.
------------------------
(a) The Executive shall at all times have the
right, upon sixty (60) days written notice to the Company, to terminate the
Executive's employment with the Company hereunder. Upon any termination pursuant
to this Section 5.5(a) (other than a termination due to Executive's death,
disability, or a termination by the Executive for "Good Reason," as described
below), the Company shall (i) pay to the Executive any accrued and earned but
unpaid Base Salary through the effective date of termination specified in the
written notice by the Executive and (ii) pay to the Executive his accrued and
earned but unpaid Incentive Compensation, if any, for any Bonus Period ending on
or before the termination of Executive's employment with the Company. Any and
all unexercisable and/or unexercised Stock Options as of the Executive's
termination under this Section 5.5(a) shall be forfeited, terminated and deemed
null and void thirty (30) days from the date of the Executive's termination of
employment with the Company. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable and necessary business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1).
(b) In the event the shareholders of the Company
do not approve the Stock Incentive Plan and Agreement, pursuant to the terms of
Section 4.4 hereof, the Executive may terminate his employment hereunder for
"Good Reason" at any time before October 15, 1998. Upon the Executive's
termination of his employment with the Company for Good Reason, the Company
shall (i) pay to the Executive any accrued and earned but unpaid Base Salary
through the effective date of termination specified in the written notice by the
Executive, and (ii) pay to the Executive his accrued and earned but unpaid
Incentive Compensation, if any, for any Bonus Period ending on or
-10-
<PAGE>
before the termination of Executive's employment with the Company. In addition,
if, and only to the extent that, Incentive Compensation would have been payable
to the Executive for the Bonus Period in which the Executive terminates his
employment with the Company pursuant to this Section 5.5(b), based upon
satisfaction of the pre-determined objectives set by the Compensation Committee
for such Bonus Period, the Company shall pay the Executive a pro rata share
(based upon the ratio of the period during the Bonus Period in which the
Executive was employed with the Company, as compared to the total Bonus Period)
of the Incentive Compensation that is earned for the Bonus Period in which his
employment terminates, payable within two and one-half (2 1/2) months after the
end of such Bonus Period. Further, upon the Executive's termination of his
employment with the Company pursuant to this Section 5.5(b), the provisions of
Section 6.1 hereof shall terminate. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable and necessary business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1). In the event the shareholders of the Company do not
approve the Stock Incentive Plan and Agreement, in accordance with Section
162(m) of the Internal Revenue Code, prior to September 30, 1998, any Stock
Options granted to the Executive, pursuant to Section 4.4 hereof, any rights to
Deferred Compensation under Section 4.4(e) and any rights to purchase shares for
a nonrecourse note under Section 4.5(a) shall be deemed null and void AB INITIO,
whether or not Executive terminates his employment pursuant to this Section
5.5(b).
Upon any termination pursuant to this Section 5.5, the Executive shall be deemed
to have resigned as Chairman of the Board of the Company, and if required by the
Board, the Executive hereby agrees to immediately execute a resignation letter
and to deliver such letter to the Board.
5.6 SURVIVAL. The provisions of this Article 5 shall survive
any termination of this Agreement, as applicable.
6. Restrictive Covenants.
---------------------
6.1 NON-COMPETITION. At all times while the Executive is
employed by the Company and unless (i) the Executive's employment with the
Company is terminated prior to the Expiration Date by the Company without cause
(as defined in Section 5.1) or (ii) the Executive terminates his employment with
the Company for Good Reason (as defined in Section 5.5), for a two (2) year
period after the termination of the Executive's employment with the Company, the
Executive shall not, directly or indirectly, engage in or have any interest in
any sole proprietorship, partnership, corporation or business or any other
person or entity (whether as an employee, officer, director, partner, agent,
security holder, creditor, consultant or otherwise) that directly or indirectly
(or through any affiliated entity) engages in competition with the Company;
provided that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or
-11-
<PAGE>
automated dissemination of quotations of securities prices in common use, so
long as the Executive does not control, acquire a controlling interest in or
become a member of a group which exercises direct or indirect control or, more
than five percent of any class of capital stock of such corporation.
6.2 NONDISCLOSURE. The Executive shall not at any time
divulge, communicate, use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any Confidential Information
(as hereinafter defined) pertaining to the business of the Company. Any
Confidential Information or data now or hereafter acquired by the Executive with
respect to the business of the Company (which shall include, but not be limited
to, information concerning the Company's financial condition, prospects,
technology, customers, suppliers, sources of leads and methods of doing
business) shall be deemed a valuable, special and unique asset of the Company
that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company with respect to all of such
information. For purposes of this Agreement, "Confidential Information" means
information disclosed to the Executive or known by the Executive as a
consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by the Executive) prior to or
after the date hereof, and not generally known, about the Company or its
business. Notwithstanding the foregoing, nothing herein shall be deemed to
restrict the Executive from disclosing Confidential Information to the extent
required by law.
6.3 NONSOLICITATION OF EMPLOYEES AND CLIENTS. At all times
while the Executive is employed by the Company and for a two (2) year period
after the termination of the Executive's employment with the Company for any
reason, the Executive shall not, directly or indirectly, for himself or for any
other person, firm, corporation, partnership, association or other entity (a)
employ or attempt to employ, or solicit the employment of, or enter into any
contractual arrangement with, any employee or former employee of the Company,
unless such employee or former employee has not been employed by the Company for
a period in excess of six months, and/or (b) call on or solicit any of the
actual or targeted prospective clients of the Company on behalf of any person or
entity in connection with any business competitive with the business of the
Company, nor shall the Executive make known the names and addresses of such
clients or any information relating in any manner to the Company's trade or
business relationships with such customers, other than in connection with the
performance of Executive's duties under this Agreement.
6.4 BOOKS AND RECORDS. All books, records, and accounts
relating in any manner to the customers or clients of the Company, whether
prepared by the Executive or otherwise coming into the Executive's possession,
shall be the exclusive property of the Company and shall be returned immediately
to the Company on termination of the Executive's employment hereunder or on the
Company's request at any time.
6.5 DEFINITION OF COMPANY. Solely for purposes of this Section
6, the term "Company" also shall include any existing or future subsidiaries of
the Company that are operating
-12-
<PAGE>
during the time periods described herein and any other entities that directly or
indirectly, through one or more intermediaries, control, are controlled by or
are under common control with the Company during the periods described herein.
6.6 ACKNOWLEDGMENT BY EXECUTIVE. The Executive acknowledges
and confirms that (a) the restrictive covenants contained in this Section 6 are
reasonably necessary to protect the legitimate business interests of the
Company, and (b) the restrictions contained in this Section 6 (including without
limitation the length of the term of the provisions of this Section 6) are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or
coercion of any kind. The Executive further acknowledges and confirms that his
full, uninhibited and faithful observance of each of the covenants contained in
this Section 6 will not cause him any undue hardship, financial or otherwise,
and that enforcement of each of the covenants contained herein will not impair
his ability to obtain employment commensurate with his abilities and on terms
fully acceptable to him or otherwise to obtain income required for the
comfortable support of him and his family and the satisfaction of the needs of
his creditors. The Executive acknowledges and confirms that his special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company in violation of the
terms of this Section 6. The Executive further acknowledges that the
restrictions contained in this Section 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company's successors and
assigns.
6.7 REFORMATION BY COURT. In the event that a court of
competent jurisdiction shall determine that any provision of this Section 6 is
invalid or more restrictive than permitted under the governing law of such
jurisdiction, then only as to enforcement of this Section 6 within the
jurisdiction of such court, such provision shall be interpreted and enforced as
if it provided for the maximum restriction permitted under such governing law.
6.8 EXTENSION OF TIME. If the Executive shall be in violation
of any provision of this Section 6, then each time limitation set forth in this
Section 6 shall be extended for a period of time equal to the period of time
during which such violation or violations occur. If the Company seeks injunctive
relief from such violation in any court, then the covenants set forth in this
Section 6 shall be extended for a period of time equal to the pendency of such
proceeding including all appeals by the Executive.
6.9 SURVIVAL. The provisions of this Section 6 shall survive
any termination of this Agreement, as applicable.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and
-13-
<PAGE>
restraining any violation of any or all of the covenants contained in Section 6
of this Agreement by the Executive or any of his affiliates, associates,
partners or agents, either directly or indirectly, and that such right to
injunction shall be cumulative and in addition to whatever other remedies at law
or equity the Company may possess.
8. MEDIATION. Except to the extent the Company has the right to seek
an injunction under Section 7 hereof, in the event a dispute arises out of or
relates to this Agreement, or the breach thereof, and if the dispute cannot be
settled through negotiation, the parties hereby agree first to attempt in good
faith to settle the dispute by mediation administered by the American
Arbitration Association under its Employment Mediation Rules before resorting to
litigation or some other dispute resolution procedure.
9. SECTION 162(M) LIMITS. For purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (collectively, "Section 162(m)"), for each fiscal year of the
Company, payment of the portion (the "Section 162(m) Portion") of the
Executive's Incentive Compensation under Section 3.2 earned for that fiscal year
that would not otherwise be deductible by reason of Section 162(m) (determined
after taking into account all other remuneration required to be taken into
account pursuant to Section 162(m) for the year), shall be subject to the
following conditions: (i) the pre-determined objectives referenced in Section
3.2(b) hereof shall be determined by the Compensation Committee of the Company,
at such times as may be required for the Section 162(m) Portion to be deductible
under Section 162(m); (ii) the Company's attainment of the pre-determined
objectives shall be determined by the Compensation Committee, in its sole
discretion, (iii) payment of the Section 162(m) Portion shall be subject to the
prior approval by the shareholders of the Company of the material terms of the
pre-determined objectives referenced in Section 3.2(b) hereof (including the
maximum amount of Incentive Compensation that may be paid to the Executive for
any calendar year pursuant to clause (iv) of this Section 9); and (iv) the sum
of (A) the Incentive Compensation under Section 3.2 and (B) the Warrant Reset
Incentive under Section 3.3, payable to the Executive for any calendar year
shall not exceed One Million Dollars ($1,000,000). Notwithstanding any other
provision of this Agreement to the contrary, compensation otherwise payable
hereunder to the Executive that, for any year, does not satisfy any of the
exceptions to the deduction limitations set forth under Section 162(m), shall
not, for such year, exceed the deduction limitation amount set forth under
Section 162(m). In addition, the grant of Stock Options pursuant to Section 4.4
hereof, the payment of any Deferred Compensation made Section 4.4(e) and any
rights to purchase shares of the Company's common stock for a nonrecourse note
under Section 4.5(a) all shall be subject to and conditioned upon (y) the
approval of the Compensation Committee of the Company and (z) the approval by
the shareholders of the Company of the Stock Incentive Plan and Agreement
pursuant to which the Stock Options shall be granted.
10. ASSIGNMENT. Neither party shall have the right to assign or
delegate his rights or obligations hereunder, or any portion thereof, to any
other person without the prior written consent of the other party, except that
the Company may assign its rights and obligations to a successor in
-14-
<PAGE>
interest in the event of a sale, merger or reorganization of the Company.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between the Executive and the Company (or
any of its affiliates) with respect to such subject matter. This Agreement may
not be modified in any way unless by a written instrument signed by both the
Company and the Executive.
13. NOTICES: All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent (i) if to the Company, addressed to Atlantic Gulf
Communities Corporation, 2601 S. Bayshore Drive, Miami, Florida 33133,
Attention: Corporate Secretary, and (ii) if to the Executive, to his address as
reflected on the payroll records of the Company, or to such other address as
either party hereto may from time to time give notice of to the other.
14. BENEFITS; Binding Effect. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
15. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
-15-
<PAGE>
16. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation. The failure by either party to
exercise any rights hereunder shall not be construed as a waiver by such party
of such right or of such party's future exercise of such right.
17. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable costs
and attorneys' fees of the other. The terms of this Section 17 shall survive any
termination of this Agreement.
18. WAIVER OF JURY TRIAL. The Executive hereby knowingly, voluntarily
and intentionally waives the right he may have to a trial by jury in respect of
any litigation based hereon, or arising out of, under or in connection with this
Agreement and any agreement, document or instrument contemplated to be executed
in conjunction herewith, or any course of conduct, course of dealing, statements
(whether verbal or written) or actions of any party hereto.
19. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
20. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the Executive and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
-16-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY:
ATLANTIC GULF COMMUNITIES
CORPORATION, a Delaware corporation
By: ______________________________________
Name:
Title:
COMPENSATION COMMITTEE OF
ATLANTIC GULF COMMUNITIES CORPORATION,
a Delaware Corporation
By: ________________________________
Name:
Title: Chairman
EXECUTIVE:
___________________________________________
J. Larry Rutherford
-17-
<PAGE>
SCHEDULE 1
1997 OBJECTIVES
Achieving the projected "cash flow" in the attached "AGC Business Plan" for the
4th Quarter of 1997 for the following items:
Net Contributions
-----------------
1. Bulk Land Sales $ 14,472.00
1. Scattered Homesites 766.00
1. Subdivision Homesites 2,145.00
1. Contracts, Mortgages & other Receivables 6,055.00
1. Overhead (2,886.00)
and maintaining the P&L margins associated with these cash flows.
-18-
<PAGE>
ATLANTIC GULF COMMUNITIES CORPORATION
STOCK INCENTIVE PLAN AND AGREEMENT
FOR
J. LARRY RUTHERFORD
Agreement
---------
1. GRANT OF OPTION. Atlantic Gulf Communities Corporation, a Delaware
corporation (the "Company") hereby grants, as of November 17, 1997 to J. Larry
Rutherford (the "Optionee") an option (the "Option") to purchase up to Three
Million (3,000,000) shares of the Company's Common Stock, $.01 par value per
share (the "Shares"), at an exercise price per share equal to the Option Price.
The Option shall be subject to the terms and conditions set forth herein. The
Option is a nonqualified stock option, and not an Incentive Stock Option
2. STOCK OPTION PLAN. This Agreement shall also serve as the plan under which
the Option is granted, pursuant to the regulations promulgated under Section 162
of the Internal Revenue Code. The maximum number of shares that may be subject
to acquisition under the Option may not exceed Three Million (3,000,000) shares.
3. DEFINITIONS. As used herein, the following terms shall have the meaning
indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall have the meaning set forth for such term in Section 5.1 of
the Employment Agreement.
(c) "Committee" shall mean a committee appointed by the Board (the
"Committee") which shall be composed of two or more Directors all of whom shall
be Outside Directors. The membership of the Committee shall be constituted so as
to comply at all times with the applicable requirements of Rule 16b-3
promulgated under the Securities Exchange Act and Section 162(m) of the Internal
Revenue Code. The Committee shall serve at the pleasure of the Board and shall
have the powers designated herein and such other powers as the Board may from
time to time confer upon it.
(d) "Common Stock" shall mean the Company's Common Stock, par value $.01 per
share.
(e) "Director" shall mean a member of the Board.
(f) "Employment Agreement" shall mean that certain Employment Agreement
entered into by and between the Company and the Optionee, of even date herewith.
"Fair Market Value" of a Share on any date of reference shall mean the
"Closing Price" (as
<PAGE>
defined below) of the Common Stock on such date (or if such date is not a
business day, on the immediately preceding business day), unless the Committee
in its sole discretion shall determine otherwise in a fair and uniform manner.
For the purpose of determining Fair Market Value, the "Closing Price" of the
Common Stock on any day shall be the last reported sale price of the Common
Stock on the National Association of Securities Dealers' National Market System,
on an national securities exchange, or, if no such sales price is reported, the
mean between the closing high bid and low asked quotations for such day of
Common Stock on such system, as reported in any newspaper of general
circulation. If no quotation is made for the applicable day, the Fair Market
Value shall be determined in the manner set forth in the preceding sentence
using quotations for the next preceding day for which there were quotations,
provided that such quotations shall have been made within the ten (10) "trading"
days preceding the applicable day. Notwithstanding the foregoing, if no such
information is available, or if otherwise determined necessary by the Committee,
the Fair Market Value shall be determined in good faith by the Committee or the
Board in a fair and uniform manner.
(h) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(i) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(j) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(k) "Option" (when capitalized) shall mean any option granted under
this Agreement.
(l) "Option Price" shall mean the Fair Market Value of a Share on the
Shareholder Approval Date.
(m) "Outside Director" shall mean a member of the Board who qualifies
as an "outside director" under Section 162(m) of the Internal Revenue Code and
the regulations thereunder and as a "Non-Employee Director" under Rule 16b-3
promulgated under the Securities Exchange Act.
(n) "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(o) "Share" shall mean a share of Common Stock..
(p) "Shareholder Approval Date" shall mean the date on which this Stock
Incentive Plan and Agreement is approved by a majority vote of the shareholders
of the Company, in satisfaction of Section 162(m) of the Internal Revenue Code.
Exercise Schedule.
-----------------
(a) Except as otherwise provided in Sections 7 or 10 of this Agreement,
the Option shall
2
<PAGE>
be exercisable in whole or in part, and cumulatively, according to the following
schedule:
Exercisability Date Number of Shares That Become Available for Purchase
- ------------------- ---------------------------------------------------
Shareholder Approval Date 750,000
December 31, 1998 750,000
December 31, 1999 750,000
December 31, 2000 750,000
(b) Notwithstanding the foregoing, in the event the Optionee's
employment with the Company is terminated by the Company without Cause, pursuant
to Section 5.4 of the Employment Agreement, any portion of the Option that has
not become exercisable prior to the date of Optionee's termination shall become
immediately exercisable upon termination by the Company of the Optionee's
employment.
(c) The Option shall terminate on, and in no event shall the Option be
exercisable after, November 16, 2004.
5. METHOD OF EXERCISE. This Option shall be exercisable in whole or in part in
accordance with the exercise schedule set forth in Section 4 hereof by written
notice which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such Shares as may be required by the Company. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The written notice shall be accompanied by payment
of the exercise price. This Option shall be deemed to be exercised after both
(a) receipt by the Company of such written notice accompanied by the exercise
price and (b) arrangements that are satisfactory to the Committee in its sole
discretion have been made for Optionee's payment to the Company of the amount
that is necessary to be withheld in accordance with applicable Federal or state
withholding requirements. No Shares will be issued pursuant to the Option unless
and until such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares then may be traded.
6. METHOD OF PAYMENT. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of the Optionee: (a) cash;
(b) check; or (c) such other consideration or in such other manner as may be
determined by the Committee or the Board, which other method, in the discretion
of the Committee or the Board may include, without limitation, payment of the
exercise price in whole or in part (i) with Shares, (ii) by a promissory note
payable to the order of the Company in a form acceptable to the Committee, or
(iii) by the Company retaining from the Shares to be delivered upon exercise of
the Option that number of Shares having a Fair Market Value on the date of
exercise equal to the option price for the number of Shares with respect to
which the Optionee exercises the Option or by any other form of cashless
exercise procedure approved by the Committee or the Board.
3
<PAGE>
7. TERMINATION OF OPTION. Any and all unvested or unexercised portion of the
Option shall terminate and become null and void at the time of the earliest to
occur of the following:
(a) five (5) business days after the date the Optionee's employment with the
Company is terminated for Cause, pursuant to Section 5.1 of the Employment
Agreement;
(b) ninety (90) days after the date the Optionee's employment with the
Company is terminated (i) as a result of a disability of the Optionee, pursuant
to Section 5.2 of the Employment Agreement, (ii) as a result of the death of the
Optionee, pursuant to Section 5.3 of the Employment Agreement, or (iii) by the
Company without Cause, pursuant to Section 5.4 of the Employment Agreement; or
(c) thirty (30) days after the date the Optionee terminates his employment
with the Company, pursuant to Section 5.5 (a) of the Employment Agreement.
Also, the Committee or the Board, in its sole discretion may by giving
written notice (the "cancellation notice") cancel, effective upon the date of
the consummation of any corporate transaction described in Section 10(a) of this
Agreement or the consummation of any reorganization, merger, consolidation or
other transaction in which the Company does not survive, any Option that remains
unexercised on such date. Such cancellation notice shall be given thirty (30)
days prior to the proposed date of such cancellation and may be given either
before or after approval of such corporate transaction.
8. Transferability.
---------------
(a) The Option is not transferable otherwise than by will or the laws of
descent and distribution, and during the lifetime of the Optionee the Option
shall be exercisable only by the Optionee. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee.
(b) Unless the prior written consent of the Committee or the Board is
obtained and the transaction does not violate the requirements of Rule 16b-3
promulgated under the Securities Exchange Act, no Shares acquired pursuant to
the exercise of an Option may be sold, assigned, pledged or otherwise
transferred prior to the expiration of the six-month period following the date
on which the Option was granted.
9. NO RIGHTS OF STOCKHOLDERS. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of any portion of the Option prior to
the date of exercise of the Option.
4
<PAGE>
10. CHANGE IN CONTROL. This Option shall become immediately fully exercisable in
the event of a "Change in Control" or in the event that the Committee or the
Board exercises its discretion to provide a cancellation notice with respect to
the Option pursuant to Section 7 hereof. For this purpose, the term "Change in
Control" shall mean:
(a) Approval by the shareholders of the Company of (i) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or (ii) a liquidation or dissolution of the Company or (iii)
the sale of all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned); or
(b) Individuals who, as of the date hereof, constitute the Board (as of the
date hereof the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that (i) any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a- 11 of Regulation
14A promulgated under the Securities Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board, and (ii) any person becoming a director subsequent to the date hereof who
is nominated by AP-AGC, LLC, a shareholder of the Company, and who replaces a
member of the Incumbent Board nominated by AP-AGC, LLC, shall be for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or
(c) The acquisition (other than from the Company) by any person, entity or
"group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, (excluding, for this purpose, the Company or its subsidiaries, or
any employee benefit plan of the Company or its subsidiaries which acquires
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act) of 30% or more of either the then outstanding Common
Stock or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors.
11. Adjustment of Shares.
--------------------
(a) If at any time while unexercised Options are outstanding, there shall be
any increase or decrease in the number of issued and outstanding Shares through
the declaration of a stock dividend or through any recapitalization resulting in
a stock split-up, combination or exchange of Shares, then and in such event,
appropriate adjustment shall be made in the number of Shares and the exercise
price per Share thereof subject to any outstanding Option, so that the same
percentage
5
<PAGE>
of the Company's issued and outstanding Shares shall remain subject to purchase
at the same aggregate exercise price.
(b) The Committee or the Board may change the terms of Options outstanding
under this Agreement, with respect to the option price or the number of Shares
subject to the Options, or both, when, in the Committee's or Board's sole
discretion, such adjustments become appropriate so as to preserve but not
increase benefits under this Agreement.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made to, the number of or exercise price for Shares then subject to
outstanding Options granted under this Agreement.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under this Agreement shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
12. Issuance of Shares.
------------------
(a) The Company shall not be obligated to issue any Shares unless it is
advised by counsel of its selection that it may do so without violation of the
applicable Federal and State laws pertaining to the issuance of securities, and
may require any stock so issued to bear a legend, may give its transfer agent
instructions, and may take such other steps, as in its judgment are reasonably
required to prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon exercise of any
Option, the Committee or the Board may require such agreements or undertakings
as the Committee or the Board may deem necessary or advisable to facilitate
compliance with any applicable law or regulation including, but not limited to,
the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised,
that he is acquiring the Shares to be issued to him
for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares;
and
(ii)a representation, warranty and/or agreement to be
bound by any
6
<PAGE>
legends endorsed upon the certificate(s) for such
Shares that are, in the opinion of the Committee or
the Board, necessary or appropriate to facilitate
compliance with the provisions of any securities laws
deemed by the Committee or the Board to be applicable
to the issuance and transfer of such Shares.
13. Deferred Compensation.
---------------------
(i) In the event that the Option Price exceeds $5.75 per
Share, then the Company shall pay to the Executive as deferred compensation (the
"Deferred Compensation"), the following amounts:
(x) On July 1, 2001, an amount equal to the product
of 1,000,000 multiplied by the lesser of (1) the Date
of Grant Spread and (2) the Date of Payment Spread on
June 30, 2001;
(y) On July 1, 2002, an amount equal to the product
of 1,000,000 multiplied by the lesser of (1) the Date
of Grant Spread and (2) the Date of Payment Spread on
June 30, 2002; and
(z) On July 1, 2003, an amount equal to the product
of 1,000,000 multiplied by the lesser of (1) the Date
of Grant Spread and (2) the Date of Payment Spread on
June 30, 2003.
(ii) For purposes of this Agreement:
(x) the "Date of Grant Spread" shall mean the amount,
if any, by which (1) the average Fair Market Value of
a Share on each business day in the 30 day period
ending November 17, 1997 exceeds (2) $5.75; and
(y) the "Date of Payment Spread" as of any date shall
mean the amount, if any, by which (1) the average
Fair Market Value of a Share on each business day in
the 30 day period ending on that date exceeds (2)
$5.75.
(iii) The Company shall make payment of the amounts
required under this Section 13 in cash or Shares, or any combination thereof as
determined by the Company, less applicable withholding taxes.
14. FINANCED STOCK PURCHASE. In addition to the Stock Options provided for in
Section 1 hereof, the Company shall make loans to the Executive (the "Loans")
equal to the funds necessary for the purchase by the Executive of up to an
aggregate of One Million Dollars ($1,000,000) worth of the common stock of the
Company, valued at fair market value on the date of purchase. The Loans shall be
secured by a pledge of the shares of common stock purchased by the Executive. Up
to Four Hundred Thousand Dollars ($400,000) of the Loans shall be recourse loans
as to the Executive, and up to Six Hundred Thousand Dollars ($600,000) of the
Loans shall be non-recourse as to the
7
<PAGE>
Executive. The term of the Loans shall be for five (5) years, payable in annual
installments of interest only, with principal and unpaid interest payable on
maturity, and the interest rate of the Loans shall be the prime rate, as
published in the Wall Street Journal from time to time. In addition to other
customary events of default, the Loans shall become due and payable in full upon
(i) the termination by the Company of Executive's employment with the Company
hereunder for cause (as defined in Section 5.1 of the Employment Agreement with
the Company), or (ii) the termination by Executive of his employment with the
Company hereunder. The terms and conditions of all promissory notes evidencing
the Loans, and the terms and conditions of all pledge agreements evidencing the
pledge of the shares of common stock as security for the Loans, shall be in a
form satisfactory to the Company.
15. SHAREHOLDER APPROVAL REQUIREMENT. Notwithstanding anything to the
contrary herein, the Optionee's rights hereunder shall be subject to and
conditioned upon approval of this Stock Incentive Plan and Agreement by a
majority vote of the shareholders of the Company, in satisfaction of Section
162(m) of the Internal Revenue Code.
16. ADMINISTRATION.
--------------
(a) This Agreement shall be administered by the Committee or the Board.
(b) The Committee or the Board, from time to time, may adopt rules and
regulations for carrying out the purposes of this Agreement. The determinations
by the Committee or the Board, and the interpretation and construction of any
provision of this Agreement by the Committee or the Board, shall be final and
conclusive.
17. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Option nor this Agreement
shall confer upon the Optionee any right to continued employment or service with
the Company.
18. LAW GOVERNING. This Agreement shall be governed in accordance with and
governed by the internal laws of the State of Delaware.
19. INTERPRETATION. The Optionee accepts the Option subject to all the
terms and provisions of this Agreement. The undersigned Optionee hereby accepts
as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions arising under the this Agreement.
20. NOTICES. Any notice under this Agreement shall be in writing and shall
be deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company's Secretary at 2601 S. Bayshore Drive, Miami,
Florida 33133, or if the Company should move its principal office, to such
principal office, and, in the case of the Optionee, to the Optionee's last
permanent address as shown on the Company's records, subject to the right of
either party to designate some other address at any time hereafter in a notice
satisfying the requirements of this Section.
8
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
COMPANY:
ATLANTIC GULF COMMUNITIES
CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
COMPENSATION COMMITTEE OF
ATLANTIC GULF COMMUNITIES CORPORATION
By:
--------------------------------
Name:
------------------------------
Title: Chairman
Dated: _______________ OPTIONEE:
By:
------------------------------
J. LARRY RUTHERFORD
9
<PAGE>
ATLANTIC GULF COMMUNITIES
2601 S. BAYSHORE DRIVE
MIAMI, FLORIDA 33133
November 26, 1997
J. Larry Rutherford
President and
Chief Executive Officer
Atlantic Gulf Communities Corporation
2601 South Bayshore Drive
Miami, Florida
Re: Employment Agreement dated effective as of July 1, 1997
between Atlantic Gulf Communities Corporation (the "Company")
and J. Larry Rutherford (the "Executive")
Dear Mr. Rutherford:
This letter is to modify, as set forth below, the above-referenced
Employment Agreement between the Company and you (the Agreement"). The
Agreement, as modified hereby, remains in full force and effect. (Any
capitalized terms used but not defined herein shall have the meaning ascribed to
them in the Agreement.)
1. Section 3.2(b) of the Agreement provides in the third to last
sentence that "[f]ifty percent (50%) of the Bonus, less applicable withholding
taxes, shall be paid to the Executive in the form of shares of common stock of
the Company, which shares shall be valued at their fair market value as of the
date of the payment." Notwithstanding anything to the contrary in the Agreement,
the third to last sentence of Section 3.2(b) of the Agreement shall only become
effective if it is approved by the Company's stockholders, which approval shall
be a majority of the total votes cast on the matter in person or by proxy. Also,
until and unless the above-mentioned stockholders approval is obtained, the
Bonus shall be payable one hundred percent (100%) in the form of cash, but if
such stockholders approval is obtained before March 15, 1999, the third to last
sentence of Section 3.2(b) of the Agreement shall be effective for all Bonus
Periods, commencing with calendar year 1998.
2. Section 3.3 of the Agreement provides in the third to last sentence
that "[f]ifty percent (50%) of the Warrant Reset Incentive, less applicable
withholding taxes, shall be paid to the Executive in the form of shares of
common stock of the Company, which shares shall be valued at their fair market
value as of the date of payment." Notwithstanding anything to the contrary in
the Agreement, the third to last sentence of Section 3.3 of the Agreement shall
only become effective if it is approved by the Company's stockholders, which
approval shall be a majority of the total votes cast on the matter in person or
by proxy, and unless such stockholders approval is obtained, the Warrant Reset
Incentive shall be payable one hundred percent (100%) in the form of cash.
<PAGE>
J. Larry Rutherford, President and
Chief Executive Officer
Page 2
3. Notwithstanding anything to the contrary in the Agreement, Section
4.5 (captioned "FINANCED STOCK PURCHASE") of the Agreement, shall only become
effective if it is approved by the Company's stockholders, which approval shall
be a majority of the total votes cast on the matter in person or by proxy.
Subject to applicable laws and NASDAQ rules, it is contemplated that
the matters set forth above to be approved by the Company's stockholders may be
submitted to the stockholders as one action, and possibly with certain other
related matters.
Please evidence your agreement with the above modifications to the
Agreement by signing your name in the space provided below and returning this
letter to the Company.
Very truly yours,
Thomas W. Jeffrey
Executive Vice President
Agreed and Accepted
as of the date first
written above
_______________________________
J. Larry Rutherford
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into effective
November 17, 1997, by and between ATLANTIC GULF COMMUNITIES CORPORATION, a
Delaware corporation with its principal office located at 2601 South Bayshore
Drive, Miami, Florida 33133 (the "Company"), and JOHN LAGUARDIA (the
"Employee").
RECITALS
--------
A. The Company is engaged in, among other things, the acquisition,
development and sale of real estate, and the management of various assets,
including a portfolio of receivables resulting from the sale of real estate.
B. The Company desires to employ the Employee as its Executive Vice
President - Chief Operating Officer under terms which are competitive in the
industry and which will provide the proper incentives to yield the maximum
benefit to the Company and its stockholders.
C. The Employee desires to enter into employment with the Company under
the terms of this Agreement.
AGREEMENT
---------
The Company and the Employee (individually, a "Party"; collectively,
the "Parties"), in consideration of the promises and mutual covenants herein set
forth, agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee, and the
Employee hereby accepts such employment, to serve as the Executive Vice
President - Chief Operating Officer under the terms of this Agreement.
2. DUTIES AND PERFORMANCE. The Employee shall serve as the Executive
Vice President - Chief Operating Officer of the Company, and shall perform such
executive and administrative services as are generally expected of a corporate
Executive Vice President - Chief Operating Officer, or as may reasonably be
assigned to him from time to time by the Company's president (the "President"),
board of directors (the "Board") or Compensation/ Stock Option Committee (the
"Compensation Committee"). The Employee shall report directly to the President.
The Employee agrees to devote his full business time, attention, energy, and
skill to the Company's business and goodwill and to perform diligently and to
the best of his ability to serve the Company's interests. Notwithstanding the
above, the Company acknowledges that the Employee has certain duties (including,
without limitation, attendance at a trial for approximately two (2) weeks) as
the liquidating trustee of Tompkins Investment Group, Incorporated, pursuant to
orders issued in Case No. CI 91-319,
<PAGE>
Circuit Court of the Ninth Judicial Circuit in and for Osceola County, Florida,
and shall be entitled to perform such duties as required and to accept such
compensation as is paid for the performance of such duties until such time as
the Employee is dismissed by the court of applicable jurisdiction from the
Employee's duties as liquidating trustee. Employee represents to the Company
that the Employee's performance of his duties as liquidating trustee shall not
have a material, adverse effect on the performance of Employee's duties under
this Agreement.
3. TERM OF AGREEMENT. The term of the Employee's employment hereunder
shall commence on November 17, 1997, and continue until 5:00 p.m. November 17,
2001, unless earlier terminated pursuant to Section 9 below.
4. COMPENSATION.
a. The Company shall pay to the Employee, as compensation for his
services hereunder, a salary at the rate of $300,000.00 per annum ("Base
Compensation"), payable biweekly in accordance with the Company's general
policies and procedures for payment of salaries to its executive officers.
b. In addition to the Base Compensation, the Employee shall be
eligible for an annual bonus based upon Employee and Company performance (the
"Performance Bonus") of up to 100% of his Base Compensation. The Employee's
ability to earn a Performance Bonus shall be determined based upon objectives
and other criteria set by the President and approved by the Board or
Compensation Committee, as applicable, in consultation with the Employee. Fifty
percent (50%) of the Performance Bonus shall be payable in cash, and at the
Company's option, fifty percent (50%) of the Performance Bonus may be paid in
shares of the Company's common stock based upon the fair market value per share
at the close of business on the day immediately preceding the date of the
payment of the Performance Bonus; provided however that to the
-2-
<PAGE>
extent that any portion of the Performance Bonus is paid in stock, the Company
shall, on or before the end of the calendar year in which such stock is
transferred to Employee, make a loan (the "Stock Loan") to Employee upon the
following terms and conditions:
(i) The Stock Loan shall be in an amount
equal to the actual federal income tax imposed upon the issuance of the common
stock based upon the highest marginal tax bracket actually imposed upon
Employee;
(ii) The Stock Loan shall be evidenced by a
non-recourse promissory note (the "Note"), secured by the stock issued to
Employee as a portion of the Performance Bonus. Interest on the Stock Loan shall
accrue at the prime rate, as published in The Wall Street Journal from time to
time, and shall be payable monthly in arrears. The full amount of the principal
of the Stock Loan, together with any accrued and unpaid interest, shall be
payable one year from the date of the Note;
(iii) The Note shall allow Employee, at any
time, to pay the note in full by tendering to the holder of the Note the stock
secured by the Note.
c. Pursuant to the authorization and action by the
Compensation/Stock Option Committee (the "Compensation Committee") on November
17, 1997, the Employee has been granted options to purchase up to Four Hundred
Fifty Thousand (450,000) shares of the Company's common stock (the "Stock
Options"), subject to the terms and conditions set forth in the Stock Option
Plan and Agreement dated November 17, 1997, attached hereto as Exhibit "A" (the
"Stock Option Plan and Agreement"). Notwithstanding anything to the contrary
contained herein, the Employee may not exercise his Stock Options at any time
prior to the date (the "Shareholder Approval Date") on which the Stock Option
Plan and Agreement is approved by a majority vote of the shareholders of the
Company, in satisfaction of Section 162(m) of the Internal Revenue Code. Subject
to the foregoing, the Employee's Stock Options shall vest and become exercisable
according to the following schedule (provided the Employee's employment
hereunder has not been terminated prior to each "Exercisability Date") and
subject to such other terms as may be contained in the Stock Option Plan and
Agreement:
-3-
<PAGE>
Number Of Shares
Exercisability Date Available For Purchase
- ------------------- ----------------------
Shareholder Approval Date 150,000
June 30, 1998 150,000
June 30, 1999 150,000
In the event the Shareholders of the Company do not approve the Stock
Option Plan and Agreement, in accordance with Section 162(m) of the Internal
Revenue Code, prior to September 30, 1998, any Stock Option granted to the
Employee pursuant to this Section 4.c. shall be deemed null and void AB INITIO,
and Employee shall have the right, on or before December 31, 1998, to terminate
Employee's employment. In the event Employee terminates this Agreement pursuant
to the preceding sentence, the Company shall pay to Employee (i) any Performance
Bonus or Base Compensation earned but unpaid, and (ii) a lump sum severance
compensation in the amount of $300,000, within thirty (30) days following the
date of termination. Employee shall not be entitled to any other compensation or
benefits.
The exercise price of the Stock Options shall be equal to the fair
market value per share of the common stock of the Company at the close of
business on the Shareholder Approval Date. The Stock Options shall expire on the
seventh (7th) anniversary of the applicable Exercisability Date as set forth
above, unless the Stock Options shall be forfeited on an earlier date, as set
forth herein and under the Stock Option Plan and Agreement. All other terms and
conditions of the Stock Options shall be as set forth in the Stock Option Plan
and Agreement.
Notwithstanding the above, any and all unexercisable and/or unexercised
Stock Options shall be forfeited, terminated and deemed null and void on the
dates set forth in Sections 9.a. through 9.d. hereof, as applicable in the event
the Employee's employment hereunder is terminated pursuant to the applicable
section hereof.
-4-
<PAGE>
d. In respect of all payments under this Agreement, the
Company shall withhold and pay over to the appropriate governmental agency all
payroll taxes (including income, social security, and unemployment compensation
taxes) required by the federal, state and local governments with jurisdiction
over the Company.
5. RELOCATION. The Company acknowledges that Employee currently owns a
residence located at 6073 Masters Boulevard, Orlando, Florida, 32819-4303 (the
"Residence"). Employee has advised the Company that Employee does not desire to
list the Residence for sale with a broker prior to April 1, 1998, and Employee
agrees to be responsible for all costs and expenses (including, without
limitation, mortgage payments, insurance payments and real estate taxes),
incurred with respect to the Residence through and including March 31, 1998 and
to keep the Residence in a condition substantially similar to its current
condition at the time of execution of this Agreement. From the date of this
Agreement until March 31, 1998, the Company shall reimburse Employee for the
costs to rent an apartment (the "Leased Premises") in Miami, Florida (including
utility expenses but excluding telephone expenses) (the "Rental Expenses");
provided the monthly Rental Expense does not exceed $2,000.00 and such Rental
Expenses are reasonable. From and after April 1, 1998, (i) Employee shall list
the Residence with a licensed real estate broker acceptable to the Company,
pursuant to a listing agreement reasonably acceptable to the Company for an
amount not to exceed $750,000.00, and (ii) the Company will be responsible for
paying all out-of-pocket carrying costs of the Residence (including, without
limitation, mortgage payments, real estate taxes, utilities, insurance payments,
upkeep, maintenance, repair, and similar costs of ownership, operation and
maintenance)(the "Home Expenses"), not to exceed $4,500 per month, until the
earlier to occur of the sale of the Residence or March 31, 1999. Employee agrees
to accept a net purchase price (after all closing costs, prorations and expenses
related to closing) for the Residence equal
-5-
<PAGE>
to or exceeding $700,000.00 without regard to any federal taxes which may be
imposed on the sale of the Residence (or less than $700,000.00 in the event the
Company agrees to pay to Employee the difference between $700,000.00 and the
actual net purchase price). In the event the Residence has not been sold for a
net purchase price of at least $700,000.00 prior to March 31, 1999, the Company
agrees to purchase the Residence from Employee for a net purchase price of
$700,000.00; provided however that, in the event the Residence is under a
contract for sale which is scheduled to close after March 31, 1999, the
Company's duty to purchase the Residence on or before March 31, 1999, shall be
postponed until the earlier of the closing of such contract or until the time
for closing under such contract has passed without closing, but the Company
shall pay the Home Expenses during such extended period until the closing or
subsequent purchase of the Residence by the Company. In the event of a sale to
the Company, (i) Employee shall convey to the Company or its designee by
Warranty Deed good, marketable and insurable fee simple title to the Residence
with title in a condition substantially similar to that shown on the title
insurance policy attached hereto as Exhibit "B"(excluding any mortgages or liens
referenced therein), and (ii) all closing costs shall be paid by the Company.
Employee shall be responsible for correcting any title defects with respect to
the Residence at Employee's sole cost and expense. The Company's obligation to
pay the Home Expenses and purchase the Residence pursuant to this Section 5
shall not be terminated by the earlier termination of this Agreement by the
Company without cause pursuant to Section 9.b. below. In addition to the
foregoing, the Company agrees to reimburse Employee for the costs of moving the
Employee's personalty (the Moving Expenses"); provided such expenses are
reasonable and approved by the Company in advance of being incurred.
In the event that Employee purchases a residence in Dade or Broward
County, Florida prior to the earlier to occur of (i) the sale of the Residence,
or (ii) March 31, 1999, the Company agrees to make a loan (the "Relocation
Loan") to the Employee in an amount equal to $700,000.00 less the outstanding
principal balance, together with any accrued and unpaid interest thereon, of any
existing mortgages or liens on the Residence, which Relocation Loan shall remain
outstanding until the Residence is sold to a third party, the Company or its
designee. The Relocation Loan shall be evidenced by a non-recourse promissory
note secured by a second mortgage on the Residence or the new residence, at the
Company's option, provided such mortgage is not prohibited under the applicable
first mortgage. Interest on the Relocation Loan shall accrue at the prime rate,
as published in The Wall Street Journal from time to time, and shall be payable
monthly in arrears. The full amount of the principal of the Relocation Loan,
together with
-6-
<PAGE>
any accrued and unpaid interest, shall be due and payable upon the sale of the
Residence.
To the extent that any portion of the Rental Expenses, the Home
Expenses, the Moving Expenses, or the Relocation Loan, results in taxable income
to Employee, the Company shall pay to employee, as an additional cash
performance bonus, the "Gross Up Amount".
6. EXPENSES. The Company will reimburse the Employee for all
reasonable and necessary travel and entertainment and professional expenses
incurred by the Employee in the performance of business-related duties for the
Company and its subsidiaries.
7. FRINGE BENEFITS. During the term of the Employee's employment
hereunder, the Employee shall be entitled to such comparable fringe benefits and
perquisites as may be provided to any or all of the Company's senior executives,
including the President, pursuant to policies established from time to time by
the Board or Compensation Committee, as applicable. These fringe benefits and
perquisites shall include: (a) life insurance and health insurance; (b) four
weeks of paid vacation per year (but not cumulative from year to year); (c)
eligibility to participate in the Company's 401(k) Plan; (d) a Company-leased
car or car allowance equivalent to that provided to the president and chief
executive officer; (e) reimbursement of all reasonable expenses for or related
to car insurance, repairs and maintenance; and (f) reimbursement of up to $1,000
annually for tax planning and tax return preparation services. To the extent
that Employee is not eligible to participate in the Company's 401(k) plan during
any period of employment, the Company shall increase Employee's Base
Compensation by an amount equal to the amount which the Company would have
contributed as matching funds, assuming that the Employee would have made the
maximum contribution that would be allowed by law if the Employee were eligible
to participate in the Company's 401(k) plan during such periods; such increase
to occur at the time such amounts would have otherwise vested in Employee.
8. COVENANTS NOT TO COMPETE. During the Term of the Employee's
employment with the Company, the Employee will not: (a) other than as an
employee of the Company or any of its subsidiaries or affiliates, engage in an
active way in real estate development or sales within the geographical
boundaries of Florida; or (b) engage as a passive investor in real estate
development or sales "in competition" with the Company or any of its
subsidiaries or affiliates. Whether a particular passive investment is in
competition with the Company or any of its subsidiaries or affiliates shall be
determined by the Company's Conflicts Committee upon full disclosure of the
prospective investment by the Employee. The Employee acknowledges and agrees
that (a) the territory set
-7-
<PAGE>
forth above in which the foregoing restrictions apply are the areas in which the
Company derives or will derive a significant portion of its revenues, (b) the
foregoing restrictions as to time and area are reasonable for the protection of
the goodwill and business of the Company against irreparable injury, (c) the
foregoing restrictions do not place an undue hardship on the Employee, and (d)
the restrictions do not affect adversely the public's health, safety or welfare.
The Company acknowledges that Employee is or expects to be a passive investor in
a company to be formed which will buy, rehabilitate and sell single family homes
in the central Florida area, with relatives and friends, and the Company agrees
that this activity is not in competition with the Company; provided that
Employee agrees not to be an employee of the company.
9. TERMINATION OF EMPLOYMENT.
a. The Company may terminate the Employee's employment
hereunder at any time for "Cause," as defined below, upon giving written notice
of such involuntary termination to the Employee. In such event, Employee shall
not be entitled to any further compensation, bonus and/or benefits, and any and
all unexercisable and/or unexercised Stock Options as of the date of the
Employee's termination under this Section 9.a. shall be forfeited, terminated
and deemed null and void five (5) business days from the date of termination.
"Cause" justifying termination by the Company immediately upon written notice
shall mean any one of the following acts of or omissions by the Employee:
(1) An action or omission of the Employee which
constitutes a willful and material breach of this Agreement which is not cured
within fifteen (15) days after receipt by the Employee of written notice of
same,
(2) Fraud, embezzlement, misappropriation of
funds, breach of trust or any other dishonest and injurious conduct against the
Company, committed by the Employee,
(3) Conviction of the Employee with respect to a
felony or any other crime that involves moral turpitude, unless the conviction
is attributable to an act committed before the date of this Agreement and the
Company had actual knowledge of such act prior to its execution of this
Agreement,
(4) From and after the date of this Agreement,
any act committed by the Employee involving the excess consumption of alcohol or
drugs, or any other acts of moral turpitude committed in such a manner as to
publicly and adversely reflect upon the reputation or stature of the Company,
-8-
<PAGE>
(5) Gross or continuing negligence in connection
with the performance of the Employee's duties hereunder, or
(6) The material and willful or knowing failure
or refusal by the Employee, or the inability of the Employee (other than as a
result of a disability or death), to perform his duties hereunder, or in
accordance with the lawful written instructions of the Board of Directors.
b. If the Company wishes to: (i) terminate the Employee's
employment hereunder other than for Cause, as defined above in Section 9.a.;
(ii) to substantially diminish the duties or responsibilities of Employee; or
(iii) to materially change the title or position of Employee in the hierarchy of
the Company, (all of which shall be deemed to be a "Termination Without Cause",
and in the instance of the Company's actions described in (ii) or (iii)
immediately above, the Employee may either consent to and waive such action or
terminate his employment with the Company in writing with sixty (60) days
notice, which termination shall be deemed to be a Termination Without Cause by
the Company; provided that a failure to timely terminate as aforesaid shall
constitute a waiver by Employee), the Company shall be entitled to do so upon a
60-day written notice to the Employee of the Company's intention to Terminate
Without Cause, provided, however, that: (i) any and all unexercised Stock
Options shall be forfeited, terminated and deemed null and void ninety (90) days
from the date on which the Employee's employment with the Company terminates,
and (ii) Employee shall be entitled to receive the following compensation and
benefits:
(1) any Performance Bonus or Base Compensation
earned but unpaid;
(2) lump sum severance compensation in the
amount of $300,000, payable within fifteen days of notice to the Employee,
regardless of the Employee's future employment; and
(3) during the twelve month period directly
following the effective date of such Termination Without Cause, (i) all fringe
benefits to which the Employee would otherwise be entitled under clauses (a),
(d), (e) and (f) of the second sentence of Section 7 above or, at the Company's
option, the payment of an amount necessary, computed on an after tax basis, for
the Employee to purchase benefits substantially comparable to those to which he
would otherwise be entitled to under clauses (a), (d), (e) and (f) of the second
sentence of Section 7 above and (ii) use of an "out placement" service provider,
as designated by the Company, to the extent the Company's cost therefor does not
exceed $10,000.00; and
-9-
<PAGE>
(4) the Company shall assume, pay and be
responsible for all lease obligations in any manner related to the Leased
Premises through the earlier of: (i) the expiration of the term of this
Agreement, or (ii) the expiration of the term of the lease for the Leased
Premises. In such event, the Company shall be entitled to take possession of the
Leased Premises for the period in which the Company is satisfying the lease
obligations.
c. Employee may terminate his employment with the Company at
any time upon sixty (60) days prior written notice to the Company; however in
such event (except for Employee's termination as a result of the Company's
actions described in Section 9.b. above) Employee shall not be entitled to any
further compensation, bonus and/or severance benefits; and any and all
unexercisable and/or unexercised Stock Options as of the Employee's termination
under this Section 9.c. shall be forfeited, terminated and deemed null and void
thirty (30) days from the date of Employee's termination of employment with the
Company.
d. Notwithstanding anything herein to the contrary, this
Agreement shall terminate immediately upon the Employee's death or total and
permanent disability. For purposes of this Agreement, the Employee shall be
considered totally and permanently disabled if, as a result of illness or
injury, the Employee becomes unable to perform his regular duties on the
Company's behalf and such inability continues for 180 or more consecutive days.
In such event, Company shall (i) pay to the Employee or the estate of the
deceased Employee any accrued but unpaid Base Compensation through Employee's
date of disability or death, and (ii) pay to the Employee or the estate of the
deceased Employee his accrued and earned but unpaid Performance Bonus, if any.
Any and all unexercisable and/or unexercised Stock Options as of the date of the
Employee's death or disability shall be forfeited, terminated and deemed null
and void ninety (90) days from the date of the Employee's death and/or
disability.
10. CONFIDENTIALITY/NO SOLICITATION.
a. CONFIDENTIAL INFORMATION. The Employee shall not at any
time during or after his employment with the Company disclose or use, directly
or indirectly, any confidential information or trade secrets of the Company,
except as required by the performance of his duties hereunder and solely for the
Company's benefit and except as may be required by any law or court order. For
the purposes of this Agreement, "confidential information" shall mean all
information disclosed to the Employee, or known by him as a consequence of or
through his employment with the Company, where such information is not generally
known in the trade or industry, and where such information refers or relates in
any manner
-10-
<PAGE>
whatsoever to the business activities, processes, services or products of the
Company. Such information includes business and development plans (whether
contemplated, initiates or completed), development sites, business contacts,
methods of operation, results of analysis, customer lists, business forecasts,
financial data, costs, revenues, and similar information. Upon termination of
this Agreement, the Employee shall immediately return to the Company all of its
property, and all copies thereof, including all confidential information which
has been reduced to tangible form, in his possession, custody or control.
b. EMPLOYEE SOLICITATION. The Employee shall not, either
during the term of this Agreement, or the first 180 days after the termination
of this Agreement, solicit, encourage or induce any employee of the Company to
leave his or her employment with the Company.
c. OTHER AGREEMENTS. The Employee represents and warrants
that his performance hereunder shall not conflict with any other agreements to
which he was or is a party. The Employee agrees not to enter into any agreement,
either written or oral, which may conflict with this Agreement.
d. RELIEF. The Employee agrees that the Company will be
irreparably damaged by a breach of Section 8 or this Section 10 and that damages
at law will be an insufficient remedy to the Company. The Employee also agrees
that the Company shall be entitled, upon application to a court of competent
jurisdiction, to obtain injunctive relief to enforce the provisions of Section 8
or this Section 10, which injunctive relief shall be in addition to any other
rights or remedies available to the Company.
This Section 10 shall survive the expiration or earlier termination of
this Agreement.
11. GROSS UP PROVISIONS. It is the intent of the Company and Employee
that: (i) issuance of the Stock Loan to Employee under Section 4.b.; (ii)
reimbursement or payment by the Company of Rental Expenses, the Home Expenses,
or the Moving Expenses; and (iii) the Relocation Loan, be revenue neutral after
taxes to Employee. To the extent that any of the above compensation or payments
made under this Agreement are taxable to Employee, including payments made under
this paragraph, the Company shall pay to Employee the amounts (the "Gross Up
Amounts") necessary to pay all income taxes on such compensation or payments
reimbursed in order to "gross up" the total payments to Employee to cover taxes
on such payments and on the gross up payments required by this paragraph so that
the total payments and reimbursements to Employee
-11-
<PAGE>
under Sections 4.b., 5 and 11 of this Agreement shall be revenue neutral after
taxes to Employee.
12. INDEMNIFICATION. The Company shall indemnify Employee in all suits
or proceedings relating to or arising out of conduct or actions in his official
capacity as an officer or employee of the Company to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, including the right to have expenses (including attorney's fees)
incurred by the Employee paid by the Company in advance, as it may be amended
from time to time, and the Company's certificate of incorporation and by-laws.
This Agreement shall not in any manner diminish or change the Employee's
indemnification rights under law, including Delaware law, or under the Company's
certificate of incorporation and by-laws.
13. MODIFICATION. No change or modification of this Agreement shall be
valid unless made in writing and signed by both the Parties.
14. APPLICABLE LAW. Except for Section 12 above, which shall be
governed by and construed in accordance with the laws of the State of Delaware,
this Agreement shall be governed by and construed in accordance with the laws of
the State of Florida, without reference to provisions that refer a matter to the
laws of any other jurisdiction. The Parties hereby agree that venue shall be
exclusively within Dade County, Florida.
15. NO JURY TRIAL. THE COMPANY AND EMPLOYEE HEREBY VOLUNTARILY,
KNOWINGLY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING UNDER OR IN CONNECTION WITH THIS AGREEMENT.
16. ASSIGNMENT PROHIBITED. This Agreement is personal to the Parties
and neither Party may assign or alienate any of its rights or obligations under
this Agreement without the written consent of the other Party.
17. SEVERABILITY. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable law or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but that remainder of this Agreement shall not be invalid
and shall be given full force and effect so far as possible.
18. WAIVERS. The failure or delay of either Party at any time to
require performance by the other of any provision of this Agreement, even if
known, shall not affect the right of such Party to require performance of that
provision or to exercise any right,
-12-
<PAGE>
power or remedy hereunder, and any waiver by either Party of any breach of any
provision of this Agreement shall not be construed as a waiver of any continuing
or succeeding breach of such provision, a waiver of the provision itself, or a
waiver of any right, power or remedy under this Agreement. No notice to or
demand on either Party in any case shall, of itself, entitle such Party to any
other or further notice or demand in similar or other circumstances.
19. ENFORCEMENT COSTS. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provisions of this
Agreement, the successful or prevailing Party shall be entitled to recover
reasonable attorneys' and paralegals' fees, court costs and all expenses even if
not taxable as court costs (including all such fees, costs and expenses incident
to appeals), incurred in that action or proceeding, in addition to any other
relief to which such Party may be entitled. The terms of this Section 19 shall
survive any termination of this Agreement.
20. REMEDIES CUMULATIVE. No remedy conferred upon any Party pursuant to
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law, in equity, by
statute or otherwise, including the right to recoup damages arising out of a
breach hereof. No single or partial exercise by any Party of any right, power or
remedy hereunder shall preclude any other or further exercise thereof.
21. NOTICES. All notices and other communications required or permitted
under this Agreement shall be in writing, and shall be deemed properly given if
delivered personally, mailed by registered or certified mail in the United
States mail, postage prepaid, return receipt requested, sent by facsimile, or
sent by Express Mail, Federal Express or other nationally recognized express
delivery service, as follows:
If to the Company or the Board:
Atlantic Gulf Communities Corporation
2601 South Bayshore Drive
Miami, Florida 33133
Attention: President
Fax Number: 305-859-4398
-13-
<PAGE>
With a copy to:
Atlantic Gulf Communities Corporation
2601 South Bayshore Drive
Miami, Florida 33133
Attn: General Counsel
Fax Number: 305-859-4063
If to the Employee:
John Laguardia
6073 Bayshore Boulevard
Orlando, Florida 32819-4303
Fax Number 407-876-7748
With a copy to:
Baker & Hostetler LLP
Attn: Richard T. Fulton
201 South Orange Avenue
2300 SunTrust Center
Post Office Box 112
Fax Number: 407-841-0168
Orlando, Florida, 32801
Notice given by hand, certified or registered mail, or by Express Mail,
Federal Express or other such express delivery service, shall be effective upon
actual receipt. Notice given by facsimile transmission shall be effective upon
actual receipt if received during the recipient's normal business hours, or at
the beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices by facsimile
transmission shall be confirmed promptly after transmission in writing by
certified mail or personal delivery.
Any party may change any address to which notice is to be given to it
by giving notice as provided above of such change of address.
22. ENTIRE AGREEMENT. This Agreement incorporates the entire agreement
between the Parties with respect to the subject matter here, and supersedes all
other prior or contemporaneous agreements, negotiations or discussions between
the Parties with respect thereto.
23. MISCELLANEOUS. Captions and section headings used herein are for
convenience and are not a part of this Agreement and shall not be used in
construing it. Where necessary or appropriate to the meaning hereof, the
singular and plural shall be deemed to
-14-
<PAGE>
include each other, and the masculine, feminine and neuter shall be deemed to
include each other.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
WITNESSES: COMPANY:
ATLANTIC GULF COMMUNITIES
CORPORATION
By:
- ------------------------- ---------------------------
Print: J. Larry Rutherford,
------------------ Chairman of the Board, President
and Chief Executive Officer
- -------------------------
Print:
------------------
EMPLOYEE:
- ------------------------- ------------------------------
Print: ------------------ JOHN LAGUARDIA
- -------------------------
Print: ------------------
<PAGE>
ATLANTIC GULF COMMUNITIES CORPORATION
STOCK OPTION PLAN AND AGREEMENT
FOR
JOHN LAGUARDIA
AGREEMENT
1. GRANT OF OPTION. Atlantic Gulf Communities Corporation, a Delaware
corporation (the "Company") hereby grants, as of November 17, 1997 to John
Laguardia (the "Optionee") an option (the "Option") to purchase up to Four
Hundred and Fifty Thousand (450,000) shares of the Company's Common Stock, $.10
par value per share (the "Shares"), at an exercise price per share equal to the
Option Price. The Option shall be subject to the terms and conditions set forth
herein. The Option is a nonqualified stock option, and not an Incentive Stock
Option
2. STOCK OPTION PLAN. This Agreement shall also serve as the plan under which
the Option is granted, pursuant to the regulations promulgated under Section 162
of the Internal Revenue Code. The maximum number of shares that may be subject
to acquisition under the Option may not exceed Four Hundred and Fifty Thousand
(450,000) shares.
3. DEFINITIONS. As used herein, the following terms shall have the meaning
indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall have the meaning set forth for such term in Section 9.a.
of the Employment Agreement.
(c) "Committee" shall mean a committee appointed by the Board (the
"Committee") which shall be composed of two or more Directors all of whom shall
be Outside Directors. The membership of the Committee shall be constituted so as
to comply at all times with the applicable requirements of Rule 16b-3
promulgated under the Securities Exchange Act and Section 162(m) of the Internal
Revenue Code. The Committee shall serve at the pleasure of the Board and shall
have the powers designated herein and such other powers as the Board may from
time to time confer upon it.
(d) "Common Stock" shall mean the Company's Common Stock, par value $.10
per share.
(e) "Director" shall mean a member of the Board.
(f) "Employment Agreement" shall mean that certain Employment Agreement
entered into by and between the Company and the Optionee, of even date herewith.
(g) "Fair Market Value" of a Share on any date of reference shall mean the
"Closing
<PAGE>
Price" (as defined below) of the Common Stock on such date (or if such date is
not a business day, on the immediately preceding business day), unless the
Committee in its sole discretion shall determine otherwise in a fair and uniform
manner. For the purpose of determining Fair Market Value, the "Closing Price" of
the Common Stock on any day shall be the last reported sale price of the Common
Stock on the National Association of Securities Dealers' National Market System,
on an national securities exchange, or, if no such sales price is reported, the
mean between the closing high bid and low asked quotations for such day of
Common Stock on such system, as reported in any newspaper of general
circulation. If no quotation is made for the applicable day, the Fair Market
Value shall be determined in the manner set forth in the preceding sentence
using quotations for the next preceding day for which there were quotations,
provided that such quotations shall have been made within the ten (10) "trading"
days preceding the applicable day. Notwithstanding the foregoing, if no such
information is available, or if otherwise determined necessary by the Committee,
the Fair Market Value shall be determined in good faith by the Committee or the
Board in a fair and uniform manner.
(h) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(i) "Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(j) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(k) "Option" (when capitalized) shall mean any option granted under this
Agreement.
(l) "Option Price" shall mean the Fair Market Value of a Share on the
Shareholder Approval Date.
(m) "Outside Director" shall mean a member of the Board who qualifies as an
"outside director" under Section 162(m) of the Internal Revenue Code and the
regulations thereunder and as a "Non-Employee Director" under Rule 16b-3
promulgated under the Securities Exchange Act.
(n) "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(o) "Share" shall mean a share of Common Stock..
(p) "Shareholder Approval Date" shall mean the date on which this Stock
Option Plan and Agreement is approved by a majority vote of the shareholders of
the Company, in satisfaction of Section 162(m) of the Internal Revenue Code.
4. EXERCISE SCHEDULE.
(a) Except as otherwise provided in Sections 7 or 10 of this Agreement, the
Option shall
2
<PAGE>
be exercisable in whole or in part, and cumulatively, according to the following
schedule:
EXERCISABILITY DATE NUMBER OF SHARES THAT BECOME AVAILABLE FOR PURCHASE
Shareholder Approval Date 150,000
June 30, 1998 150,000
June 30, 1999 150,000
(b)The Option shall terminate on, and in no event shall the Option be
exercisable after, the seventh (7th) anniversary of the applicable
Exercisability Date as set forth above.
5. METHOD OF EXERCISE. This Option shall be exercisable in whole or in part in
accordance with the exercise schedule set forth in Section 4 hereof by written
notice which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such Shares as may be required by the Company. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The written notice shall be accompanied by payment
of the exercise price. This Option shall be deemed to be exercised after both
(a) receipt by the Company of such written notice accompanied by the exercise
price and (b) arrangements that are satisfactory to the Committee in its sole
discretion have been made for Optionee's payment to the Company of the amount
that is necessary to be withheld in accordance with applicable Federal or state
withholding requirements. No Shares will be issued pursuant to the Option unless
and until such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares then may be traded.
6. METHOD OF PAYMENT. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of the Optionee: (a) cash;
(b) check; or (c) such other consideration or in such other manner as may be
determined by the Committee or the Board, which other method, in the discretion
of the Committee or the Board may include, without limitation, payment of the
exercise price in whole or in part (i) with Shares held by the Optionee for at
least six (6) months, (ii) by a promissory note payable to the order of the
Company in a form acceptable to the Committee, or (iii) by the Company retaining
from the Shares to be delivered upon exercise of the Option that number of
Shares having a Fair Market Value on the date of exercise equal to the option
price for the number of Shares with respect to which the Optionee exercises the
Option or by any other form of cashless exercise procedure approved by the
Committee or the Board.
7. TERMINATION OF OPTION. Any and all unvested or unexercised portion of the
Option shall terminate and become null and void at the time of the earliest to
occur of the following:
(a) five (5) business days after the date the Optionee's employment with the
Company is terminated for Cause, pursuant to Section 9.a. of the Employment
Agreement;
(b) ninety (90) days after the date the Optionee's employment with the
Company is
3
<PAGE>
terminated (i) as a result of a total and permanent disability of the Optionee,
pursuant to Section 9.d. of the Employment Agreement, (ii) as a result of the
death of the Optionee, or (iii) by the Company without Cause, pursuant to
Section 9.b. of the Employment Agreement; or
(c) thirty (30) days after the date the Optionee terminates his employment
with the Company, pursuant to Section 9.c. of the Employment Agreement.
Also, the Committee or the Board, in its sole discretion may by giving
written notice (the "cancellation notice") cancel, effective upon the date of
the consummation of any corporate transaction described in Section 10(a) of this
Agreement or the consummation of any reorganization, merger, consolidation or
other transaction in which the Company does not survive, any Option that remains
unexercised on such date. Such cancellation notice shall be given thirty (30)
days prior to the proposed date of such cancellation and may be given either
before or after approval of such corporate transaction.
8. TRANSFERABILITY.
(a) The Option is not transferable other than by will or by the laws of
descent and distribution, and during the lifetime of the Optionee the Option
shall be exercisable only by the Optionee or the Optionee's legal
representative. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
(b) Unless the prior written consent of the Committee or the Board is
obtained and the transaction does not violate the requirements of Rule 16b-3
promulgated under the Securities Exchange Act, no Shares acquired pursuant to
the exercise of an Option may be sold, assigned, pledged or otherwise
transferred prior to the expiration of the six-month period following the date
on which the Option was granted.
9. NO RIGHTS OF STOCKHOLDERS. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of any portion of the Option prior to
the date of exercise of the Option.
10. CHANGE IN CONTROL. This Option shall become immediately fully exercisable in
the event of a "Change in Control" or in the event that the Committee or the
Board exercises its discretion to provide a cancellation notice with respect to
the Option pursuant to Section 7 hereof. For this purpose, the term "Change in
Control" shall mean:
(a) Approval by the shareholders of the Company of (i) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors
4
<PAGE>
of the reorganized, merged or consolidated company's then outstanding voting
securities, or (ii) a liquidation or dissolution of the Company or (iii) the
sale of all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned); or
(b) Individuals who, as of the date hereof, constitute the Board (as of the
date hereof the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that (i) any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a- 11 of Regulation
14A promulgated under the Securities Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board, and (ii) any person becoming a director subsequent to the date hereof who
is nominated by AP-AGC, LLC, a shareholder of the Company, and who replaces a
member of the Incumbent Board nominated by AP-AGC, LLC, shall be for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or
(c) The acquisition (other than from the Company) by any person, entity or
"group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, (excluding, for this purpose, AP-AGC, LLC or the Company or its
subsidiaries, or any employee benefit plan of the Company or its subsidiaries
which acquires beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of 30% or more of either the then
outstanding Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the election of
directors.
11. ADJUSTMENT OF SHARES.
(a) If at any time while unexercised Options are outstanding, there shall be
any increase or decrease in the number of issued and outstanding Shares through
the declaration of a stock dividend or through any recapitalization resulting in
a stock split-up, combination or exchange of Shares, then and in such event,
appropriate adjustment shall be made in the number of Shares and the exercise
price per Share thereof subject to any outstanding Option, so that the same
percentage of the Company's issued and outstanding Shares shall remain subject
to purchase at the same aggregate exercise price.
(b) The Committee or the Board may change the terms of Options outstanding
under this Agreement, with respect to the option price or the number of Shares
subject to the Options, or both, when, in the Committee's or Board's sole
discretion, such adjustments become appropriate so as to preserve but not
increase benefits under this Agreement.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of
5
<PAGE>
shares of its capital stock of any class, or securities convertible into shares
of capital stock of any class, either in connection with a direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
to, the number of or exercise price for Shares then subject to outstanding
Options granted under this Agreement.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under this Agreement shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
12. ISSUANCE OF SHARES.
(a) The Company shall not be obligated to issue any Shares unless it is
advised by counsel of its selection that it may do so without violation of the
applicable Federal and State laws pertaining to the issuance of securities, and
may require any stock so issued to bear a legend, may give its transfer agent
instructions, and may take such other steps, as in its judgment are reasonably
required to prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon exercise of any
Option, the Committee or the Board may require such agreements or undertakings
as the Committee or the Board may deem necessary or advisable to facilitate
compliance with any applicable law or regulation including, but not limited to,
the following:
(i) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he is
acquiring the Shares to be issued to him for invest ment and
not with a view to, or for sale in connection with, the
distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to be bound
by any legends endorsed upon the certificate(s) for such
Shares that are, in the opinion of the Committee or the Board,
necessary or appropriate to facilitate compliance with the
provisions of any securities laws deemed by the Committee or
the Board to be applicable to the issuance and transfer of
such Shares.
13. SHAREHOLDER APPROVAL REQUIREMENT. Notwithstanding anything to the contrary
herein, the Optionee's rights hereunder shall be subject to and conditioned upon
approval of this Stock Option Plan and Agreement by a majority vote of the
shareholders of the Company, in satisfaction of Section 162(m) of the Internal
Revenue Code.
6
<PAGE>
14. ADMINISTRATION.
(a) This Agreement shall be administered by the Committee or the Board.
(b) The Committee or the Board, from time to time, may adopt rules and
regulations for carrying out the purposes of this Agreement. The determinations
by the Committee or the Board, and the interpretation and construction of any
provision of this Agreement by the Committee or the Board, shall be final and
conclusive.
15. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Option nor this Agreement
shall confer upon the Optionee any right to continued employment or service with
the Company.
16. LAW GOVERNING. This Agreement shall be governed in accordance with and
governed by the internal laws of the State of Delaware.
17. INTERPRETATION. The Optionee accepts the Option subject to all the terms and
provisions of this Agreement. The undersigned Optionee hereby accepts as
binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the this Agreement.
18. NOTICES. Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company's Secretary at 2601 S. Bayshore Drive, Miami,
Florida 33133, or if the Company should move its principal office, to such
principal office, and, in the case of the Optionee, to the Optionee's last
permanent address as shown on the Company's records, subject to the right of
either party to designate some other address at any time hereafter in a notice
satisfying the requirements of this Section.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
COMPANY:
ATLANTIC GULF COMMUNITIES
CORPORATION
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
Dated: OPTIONEE:
---------------------
By:
--------------------------------
JOHN LAGUARDIA
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into
effective July 1, 1997, by and between ATLANTIC GULF COMMUNITIES CORPORATION, a
Delaware corporation with its principal office located at 2601 South Bayshore
Drive, Miami, Florida 33133 (the "Company"), and THOMAS W. JEFFREY (the
"Employee").
RECITALS
--------
A. The Company is engaged in, among other things, the
acquisition, development and sale of real estate, and the management of various
assets including a portfolio of receivables resulting from the sale of real
estate.
B. The Company desires to continue the employment of the
Employee as its Executive Vice President - Chief Financial Officer under terms
which are competitive in the industry and which will provide the proper
incentives to yield the maximum benefit to
the Company and its stockholders.
C. The Employee desires to continue his employment with the
Company under the terms of this Agreement.
AGREEMENT
---------
The Company and the Employee (individually, a "Party";
collectively, the "Parties"), in consideration of the promises and mutual
covenants herein set forth, agree as follows:
1. EMPLOYMENT. The Company hereby continues the employment of
the Employee, and the Employee hereby accepts such continued employment, to
serve as the Executive Vice President Chief Financial Officer of the Company
under the terms of this Agreement.
2. DUTIES AND PERFORMANCE. The Employee shall serve as the
Executive Vice President - Chief Financial Officer of the Company, and shall
perform such executive and administrative services as are generally expected of
a corporate executive vice president and chief financial officer, or as may
reasonably be assigned to him from time to time by the Company's president (the
"President"), or the board of directors (the "Board"). The Employee shall report
directly to the President. The Employee agrees to devote his full business time,
attention, energy, and skill to the Company's business and goodwill and to
perform diligently and to the best of his ability to serve the Company's
interests.
<PAGE>
3. TERM OF AGREEMENT. The term of the Employee's employment
hereunder shall commence on July 1, 1997 and continue until 5:00 p.m. June 30,
1999, unless earlier terminated pursuant to Section 8 below.
4. COMPENSATION.
a. The Company shall pay to the Employee, as
compensation for his services hereunder: (i) from the date hereof until December
31, 1997, a salary at the rate of $200,000 per annum, and (ii) from and after
January 1, 1998, a salary at the rate of $225,000 per annum ("Base
Compensation"); payable biweekly in accordance with the Company's general
policies and procedures for payment of salaries to its executive officers.
b. In addition to the Base Compensation, the
Employee shall be eligible for an annual bonus based upon Employee and Company
performance (the "Performance Bonus") of up to 50% of his Base Compensation. The
Employee's ability to earn a Performance Bonus shall be determined based upon
objectives and other criteria set by the President and approved by the Board, in
consultation with the Employee.
c. In addition to the Base Compensation, the
Company shall pay to Employee $90,000 upon the execution of this Agreement to
terminate the employment arrangement previously authorized by the Board on
December 9, 1996. Employee and Company hereby acknowledge and agree that the
employment arrangement previously authorized by the Board on December 9,1996, is
hereby terminated and of no further force or effect. The $90,000 paid to
Employee under this Section 4.c. shall be applied against the Performance Bonus
for the year ending December 31, 1997.
d. Pursuant to the Atlantic Gulf Communities
Employee Stock Option Plan (the "Existing Plan") and the authorization and
action by the Compensation/Stock Option Committee (the "Compensation Committee")
on November 17, 1997, the Employee has been granted options to purchase up to
Fifty Thousand(50,000) shares of the Company's common stock (the "Existing Plan
Stock Options"), subject to the terms and conditions set forth in the Existing
Plan and the Existing Plan Stock Option Agreement dated November 17, 1997,
attached hereto as Exhibit "A" (the "Existing Plan Stock Option Agreement").
Pursuant to the authorization and action by the Compensation Committee on
November 17, 1997, the Employee has been granted options to purchase up to Two
Hundred Thousand (200,000) shares of the Company's common stock (the "New Plan
Stock Options"), subject to the terms and conditions set forth in the New Plan
Stock Option Agreement dated November 17, 1997 attached hereto as Exhibit "B"
(the "New Stock Option Plan and Agreement"). The Existing Plan Stock Options and
New Plan Stock Options are sometimes collectively referred to herein as the
"Stock Options". Notwithstanding anything to the contrary contained
- 2 -
<PAGE>
herein, the Employee may not exercise the New Plan Stock Options at any time
prior to the date (the "Shareholder Approval Date") on which the New Stock
Option Plan and Agreement is approved by a majority vote of the shareholders of
the Company, in satisfaction of Section 162(m) of the Internal Revenue Code.
Subject to the foregoing, the Employee's Stock Options shall vest and become
exercisable according to the following schedules (provided the Employee's
employment hereunder has not been terminated prior to each "Exercisability Date"
and subject to such other terms as may be contained in the Existing Plan, the
Existing Plan Stock Option Agreement and the New Stock Option Plan and
Agreement):
EXISTING PLAN STOCK OPTIONS
Number of Shares that Become
Exercisability Date Available for Purchase
------------------- ----------------------
November 17, 1997 16,667
June 30, 1998 16,667
June 30, 1999 16,666
The exercise price of the Existing Plan Stock Options shall be $4.3125 per
share, which price is equal to the fair market value per share of the common
stock of the Company on the date of grant. The Existing Plan Stock Options shall
expire on the seventh (7th) anniversary of the date of grant, unless the
Existing Plan Stock Options shall be forfeited on an earlier date, as set forth
herein and under the Existing Plan Stock Option Agreement and the Existing Plan.
All other terms and conditions of the Existing Plan Stock Options shall be as
set forth in the Existing Plan Stock Option Agreement and the Existing Plan.
NEW PLAN STOCK OPTIONS
Number of Shares That Become
Exercisability Date Available for Purchase
------------------- ----------------------
Shareholder Approval Date 66,667
June 30, 1998 66,667
June 30, 1999 66,666
In the event the shareholders of the Company do not approve
the New Stock Option Plan and Agreement, in accordance with Section 162(m) of
the Internal Revenue Code, prior to September 30, 1998, any New Plan Stock
Options granted to the Employee pursuant to this Section 4.d. shall be deemed
null and void AB INITIO, and the Employee may terminate this Agreement for "Good
Reason", as more fully set forth in Section 8.e. hereof.
The exercise price of the New Plan Stock Options shall be
equal to the fair market value per share of the common stock of the
- 3 -
<PAGE>
Company at the close of business on the Shareholder Approval Date. The New Plan
Stock Options shall expire on the seventh (7th) anniversary of the date of the
grant, unless the New Plan Stock Options shall be forfeited on an earlier date,
as set forth herein and under the New Stock Option Plan and Agreement. All other
terms and conditions of the New Plan Stock Options shall be as set forth in the
New Stock Option Plan and Agreement.
Notwithstanding the above, any and all unexercisable and/or
unexercised Stock Options shall be forfeited, terminated and deemed null and
void on the dates set forth in Sections 8.a. through 8.e. hereof, as applicable
in the event the Employee's employment hereunder is terminated pursuant to the
applicable section hereof.
e. In respect of all payments under this
Agreement, the Company shall withhold and pay over to the appropriate
governmental agency all payroll taxes (including income, social security, and
unemployment compensation taxes) required by the federal, state and local
governments with jurisdiction over the Company.
5. EXPENSES. The Company will reimburse the Employee for all
reasonable and necessary travel and entertainment and professional expenses
incurred by the Employee in the performance of business-related duties for the
Company and its subsidiaries.
6. FRINGE BENEFITS. During the Term of the Employee's
employment hereunder, the Employee shall be entitled to such comparable fringe
benefits and perquisites as may be provided to any or all of the Company's
senior executives, including the President, pursuant to policies established
from time to time by the Board or Compensation Committee, as applicable. These
fringe benefits and perquisites shall include: (a) life insurance and health
insurance; (b) up to four weeks of paid vacation per year (but not cumulative
from year to year); (c) eligibility to participate in the Company's 401(k) Plan;
(d) a Company-leased car or car allowance, in either event not to exceed $800
per month (based on a "closed end" lease); (e) reimbursement of all reasonable
expenses for or related to car insurance, repairs and maintenance; and (f)
reimbursement of up to $1,000 annually for tax planning and tax return
preparation services.
7. COVENANTS NOT TO COMPETE. During the Term of the Employee's
employment with the Company, the Employee will not: (a) other than as an
employee of the Company or any of its subsidiaries or affiliates, engage in an
active way in real estate development or sales within the geographical
boundaries of Florida; or (b) engage as a passive investor in real estate
development or sales "in competition" with the Company or any of its
subsidiaries or affiliates. Whether a particular passive investment is in
competition with the Company or any of its subsidiaries or
- 4 -
<PAGE>
affiliates shall be determined by the Company's Conflicts Committee upon full
disclosure of the prospective investment by the Employee. The Employee
acknowledges and agrees that (a) the territory set forth above in which the
foregoing restrictions apply are the areas in which the Company derives or will
derive a significant portion of its revenues, (b) the foregoing restrictions as
to time and area are reasonable for the protection of the goodwill and business
of the Company against irreparable injury, (c) the foregoing restrictions do not
place an undue hardship on the Employee, and (d) the restrictions do not affect
adversely the public's health, safety or welfare.
8. Termination of Employment.
--------------------------
a. The Company may terminate the Employee's
employment hereunder at any time for "Cause," as defined below, upon giving
written notice of such involuntary termination to the Employee. In such event,
Employee shall not be entitled to any further compensation, bonus and/or
benefits, and any and all unexercisable and/or unexercised Stock Options as of
the date of the Employee's termination under this Section 8.a. shall be
forfeited, terminated and deemed null and void five (5) business days from the
date of termination. "Cause" justifying termination by the Company immediately
upon written notice shall mean any one of the following acts of or omissions by
the Employee:
(1) Conviction of a felony;
(2) Violation of federal or state
securities laws;
(3) Misappropriation of the Company's
funds;
(4) The violation of any law or regulation
governing the Employee's conduct under this Agreement;
(5) Habitual use of alcohol or drugs to a
degree that such use substantially interferes with the Employee's performance of
his duties or obligations hereunder;
(6) Deliberate and premeditated acts
against the Company's best interests; or
(7) Material breach of the terms of this
Agreement.
b. If the Company wishes to terminate the
Employee's employment hereunder other than for Cause, as defined above in
Section 8.a., the Company shall be entitled to do so upon a 60-day written
notice to the Employee of the Company's intention to terminate, provided,
however, that: (i) any and all unexercised Stock Options shall be forfeited,
terminated and deemed null and
- 5 -
<PAGE>
void ninety (90) days from the date on which the Employee's employment with the
Company terminates, and (ii) Employee shall be entitled to receive the following
compensation and benefits:
(1) any bonus earned but unpaid;
(2) severance compensation at the rate of
$225,000 per annum, payable in equal biweekly installments after the effective
date of such termination until expiration of the first 12 months after such
effective date, regardless of whether the Employee becomes gainfully employed in
the ensuing 12-month period;
(3) during the first three (3) months
following the effective date of such termination, (i) all fringe benefits to
which the Employee would otherwise be entitled under clauses (d), (e) and (f) of
the second sentence of Section 6 above or, at the Company's option, the payment
of an amount necessary, computed on an after tax basis, for the Employee to
purchase benefits substantially comparable to those to which he would otherwise
be entitled to under clauses (d), (e) and (f) of the second sentence of Section
6 above, and (ii) use of an "out placement" service provider, as designated by
the Company, to the extent the Company's cost therefor does not exceed $10,000;
and
(4) during the 12-month severance
compensation period provided in Section 8.b.(2) above, all fringe benefits to
which the Employee would otherwise be entitled under clause (a) of the second
sentence of Section 6 above or, at the Company's option, the payment of an
amount necessary, computed on an after tax basis, for the Employee to purchase
benefits substantially comparable to those to which he would otherwise be
entitled to under clause (a) of the second sentence of Section 6 above.
c. Employee may terminate his employment with the
Company at any time upon 90 days prior written notice to the Company; however in
such event, Employee shall not be entitled to any further compensation, bonus
and/or severance benefits; and any and all unexercisable and/or unexercised
Stock Options as of the Employee's termination under this Section 8.c. shall be
forfeited, terminated and deemed null and void thirty (30) days from the date of
Employee's termination of employment with the Company.
d. Notwithstanding anything herein to the
contrary, this Agreement shall terminate immediately upon the Employee's death
or total and permanent disability. For purposes of this Agreement, the Employee
shall be considered totally and permanently disabled if, as a result of illness
or injury, the Employee becomes unable to perform adequately his regular duties
on the Company's behalf and such inability continues for 180 or more consecutive
days. In such event, Company shall (i) pay to the Employee or the estate of the
deceased Employee any accrued but
- 6 -
<PAGE>
unpaid Base Compensation through Employee's date of disability or death, (ii)
pay to the Employee or the estate of the deceased Employee his accrued and
earned but unpaid Performance Bonus, if any, and (iii) pay to the Employee or
the estate of the deceased Employee a severance payment equal to six (6) months
of the Employee's Base Compensation as of the Employee's date of death or
disability. Any and all unexercisable and/or unexercised Stock Options as of the
date of the Employee's death or disability shall be forfeited, terminated and
deemed null and void ninety (90) days from the date of the Employee's death
and/or disability.
e. In the event the shareholders of the Company do
not approve the New Stock Option Plan and Agreement, pursuant to the terms of
Section 4.d. hereof, the Employee may terminate his employment hereunder for
"Good Reason" at any time prior to the earlier of fifteen (15) days following
disapproval by the shareholders or October 15, 1998. Upon the Employee's
termination of his employment with the Company for Good Reason under this
Section 8.e., the Company shall (i) pay to the Employee any accrued but unpaid
Base Compensation through the date of termination, and (ii) pay to the Employee
his accrued and earned but unpaid Performance Bonus, if any. In addition, if and
only to the extent that, the Performance Bonus would have been payable to
Employee for the bonus period in which the Employee terminates his employment
with the Company pursuant to this Section 8.e., based upon satisfaction of the
predetermined objectives set by the President and approved by the Board for such
bonus period, the Company shall pay the Employee a pro-rata share (based upon
the ratio of the period during the bonus period in which the Employee was
employed with the Company, as compared to the total bonus period) of the
Performance Bonus that is earned for the bonus period in which his employment
terminates, payable within two and one-half (2 1/2) months after the end of such
bonus period. Further, (i) any and all New Stock Options shall be deemed null
and void AB INITIO in the event the shareholders of the Company do not approve
the New Stock Option Plan and Agreement prior to September 30, 1998, whether or
not Employee terminates his employment pursuant to this Section 8.e., and (ii)
in the event Employee terminates this Agreement pursuant to this Section 8.e.,
any and all unexercisable and/or unexercised Existing Plan Stock Options as of
the Employee's termination under this Section 8.e. shall be forfeited,
terminated and deemed null and void thirty (30) days from the date of Employee's
termination of employment with the Company.
9. Confidentiality/No Solicitation.
--------------------------------
a. CONFIDENTIAL INFORMATION. The Employee shall
not at any time during or after his employment with the Company disclose or use,
directly or indirectly, any confidential information or trade secrets of the
Company, except as required by the performance of his duties hereunder and
solely for the
- 7 -
<PAGE>
Company's benefit. For the purposes of this Agreement, "confidential
information" shall mean all information disclosed to the Employee, or known by
him as a consequence of or through his employment with the Company, where such
information is not generally known in the trade or industry, and where such
information refers or relates in any manner whatsoever to the business
activities, processes, services or products of the Company. Such information
includes business and development plans (whether contemplated, initiates or
completed), development sites, business contacts, methods of operation, results
of analysis, customer lists, business forecasts, financial data, costs,
revenues, and similar information. Upon termination of this Agreement, the
Employee shall immediately return to the Company all of its property, and all
copies thereof, including all confidential information which has been reduced to
tangible form, in his possession, custody or control.
b. EMPLOYEE SOLICITATION. The Employee shall not,
either during the Term, or the first 180 days after the termination of this
Agreement, solicit, encourage or induce any employee of the Company to leave his
or her employment with the Company.
c. OTHER AGREEMENTS. The Employee represents and
warrants that his performance hereunder shall not conflict with any other
agreements to which he was or is a party. The Employee agrees not to enter into
any agreement, either written or oral, which may conflict with this Agreement.
d. RELIEF. The Employee agrees that the Company
will be irreparably damaged by a breach of this Section 9 and that damages at
law will be an insufficient remedy to the Company. The Employee also agrees that
the Company shall be entitled, upon application to a court of competent
jurisdiction, to obtain injunctive relief to enforce the provisions of this
Section 9, which injunctive relief shall be in addition to any other rights or
remedies available to the Company.
This Section 9 shall survive the expiration or earlier
termination of this Agreement.
10. INDEMNIFICATION. The Company shall indemnify Employee in
all suits or proceedings relating to or arising out of conduct or actions in his
official capacity as an officer or employee of the Company to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, including the right to have expenses (including attorney's fees)
incurred by the Employee paid by the Company in advance, as it may be amended
from time to time, and the Company's certificate of incorporation and by-laws.
This Agreement shall not in any manner diminish or change the Employee's
indemnification rights under law, including Delaware law, or under the Company's
certificate of incorporation and by-laws.
- 8 -
<PAGE>
11. MODIFICATION. No change or modification of this Agreement
shall be valid unless made in writing and signed by both the Parties.
12. APPLICABLE LAW. Except for Section 10 above, which shall
be governed by and construed in accordance with the laws of the State of
Delaware, this Agreement shall be governed by and construed in accordance with
the laws of the State of Florida, without reference to provisions that refer a
matter to the laws of any other jurisdiction. The Parties hereby agree that
venue shall be exclusively within Dade County, Florida.
13. NO JURY TRIAL. THE COMPANY AND EMPLOYEE HEREBY
VOLUNTARILY, KNOWINGLY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING UNDER OR IN CONNECTION WITH THIS
AGREEMENT.
14. ASSIGNMENT PROHIBITED. This Agreement is personal to the
Parties and neither Party may assign or alienate any of its rights or
obligations under this Agreement without the written consent of the other Party.
15. SEVERABILITY. If any part of this Agreement is contrary
to, prohibited by, or deemed invalid under applicable law or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but that remainder of this Agreement shall not be invalid
and shall be given full force and effect so far as possible.
16. WAIVERS. The failure or delay of either Party at any time
to require performance by the other of any provision of this Agreement, even if
known, shall not affect the right of such Party to require performance of that
provision or to exercise any right, power or remedy hereunder, and any waiver by
either Party of any breach of any provision of this Agreement shall not be
construed as a waiver of any continuing or succeeding breach of such provision,
a waiver of the provision itself, or a waiver of any right, power or remedy
under this Agreement. No notice to or demand on either Party in any case shall,
of itself, entitle such Party to any other or further notice or demand in
similar or other circumstances.
17. ENFORCEMENT COSTS. If any legal action or other proceeding
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any provisions
of this Agreement, the successful or prevailing Party shall be entitled to
recover reasonable attorneys' and paralegals' fees, court costs and all expenses
even if not taxable as court costs (including all such fees, costs and expenses
incident to appeals), incurred in that action or proceeding, in addition to any
other relief to which such Party may
- 9 -
<PAGE>
be entitled. The terms of this Section 17 shall survive any termination of this
Agreement.
18. REMEDIES CUMULATIVE. No remedy conferred upon any Party
pursuant to this Agreement is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law, in equity, by
statute or otherwise, including the right to recoup damages arising out of a
breach hereof. No single or partial exercise by any Party of any right, power or
remedy hereunder shall preclude any other or further exercise thereof.
19. NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing, and shall be deemed properly
given if delivered personally, mailed by registered or certified mail in the
United States mail, postage prepaid, return receipt requested, sent by
facsimile, or sent by Express Mail, Federal Express or other nationally
recognized express delivery service, as follows:
If to the Company or the Board:
Atlantic Gulf Communities Corporation
2601 South Bayshore Drive
Miami, Florida 33133
Attention: President
Fax Number: 305-859-4398
With a copy to:
Atlantic Gulf Communities Corporation
2601 South Bayshore Drive
Miami, Florida 33133
Attn: General Counsel
Fax Number: 305-859-4063
If to the Employee:
Thomas W. Jeffrey
Atlantic Gulf Communities Corporation
2601 South Bayshore Drive
Miami, Florida 33133
Fax Number: 305-859-4623
With a copy to:
6832 Mindello Street
Coral Gables, Florida 33146
Notice given by hand, certified or registered mail, or by Express Mail, Federal
Express or other such express delivery service, shall
- 10 -
<PAGE>
be effective upon actual receipt. Notice given by facsimile transmission shall
be effective upon actual receipt if received during the recipient's normal
business hours, or at the beginning of the recipient's next business day after
receipt if not received during the recipient's normal business hours. All
notices by facsimile transmission shall be confirmed promptly after transmission
in writing by certified mail or personal delivery.
Any party may change any address to which notice is to be
given to it by giving notice as provided above of such change of address.
20. ENTIRE AGREEMENT. This Agreement incorporates the entire
agreement between the Parties with respect to the subject matter here, and
supersedes all other prior or contemporaneous agreements, negotiations or
discussions between the Parties with respect thereto.
21. MISCELLANEOUS. Captions and section headings used herein
are for convenience and are not a part of this Agreement and shall not be used
in construing it. Where necessary or appropriate to the meaning hereof, the
singular and plural shall be deemed to include each other, and the masculine,
feminine and neuter shall be deemed to include each other.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first set forth above.
WITNESSES: COMPANY:
ATLANTIC GULF COMMUNITIES
CORPORATION
- ------------------------- By:___________________________
Print: J. Larry Rutherford,
------------------- Chairman of the Board, President and
Chief Executive Officer
- -------------------------
Print:
-------------------
EMPLOYEE:
- ------------------------- ------------------------------
Print: THOMAS W. JEFFREY
- -------------------------
Print:
-------------------
- 11 -
<PAGE>
ATLANTIC GULF COMMUNITIES CORPORATION
EXISTING PLAN STOCK OPTION AGREEMENT
FOR
THOMAS W. JEFFREY
AGREEMENT
---------
1. GRANT OF OPTION. Atlantic Gulf Communities Corporation, a Delaware
corporation (the "Company") hereby grants, as of November 17, 1997, to Thomas W.
Jeffrey (the "Optionee") an option (the "Option") to purchase up to Fifty
Thousand (50,000) shares of the Company's Common Stock, $.10 par value per share
(the "Shares"), at an exercise price per share equal to $4.3125. The Option
shall be subject to the terms and conditions set forth herein, and in the
Atlantic Gulf Communities Corporation Employee Stock Option Plan (the "Plan"),
the provisions of which are hereby incorporated by reference. The Option is a
nonqualified stock option, and not an incentive stock option.
2. DEFINITIONS. As used herein, the following terms shall have the meaning
indicated:
a. Any capitalized term used herein which is not defined herein shall
have the meaning given in the Plan.
b. "Cause" shall have the meaning set forth for such term in Section
8.a. of the Employment Agreement.
c. "Employment Agreement" shall mean that certain Employment Agreement
entered into by and between the Company and the Optionee, effective as of July
1, 1997.
3. Exercise Schedule.
------------------
a. Except as otherwise provided in Sections 6 or 8 of this Agreement,
the Option shall be exercisable in whole or in part, and cumulatively, according
to the following schedule:
Number of Shares That Become Available
Exercisability Date for Purchase
------------------- ------------
November 17, 1997 16,667
June 30, 1998 16,667
June 30, 1999 16,666
b. The Option shall terminate on, and in no event shall the Option be
exercisable after, November 16, 2004.
4. METHOD OF EXERCISE. This Option shall be exercisable in whole or in
part in accordance with
1
<PAGE>
the exercise schedule set forth in Section 3 hereof by written notice which
shall state the election to exercise the Option, the number of Shares in respect
of which the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such Shares as
may be required by the Company. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company. The written notice shall be accompanied by payment of the
exercise price. This Option shall be deemed to be deemed to be exercised after
both (a) receipt by the Company of such written notice accompanied by the
exercise price and (b) arrangements that are satisfactory to the Committee in
its sole discretion have been made for Optionee's payment to the Company of the
amount that is necessary to be withheld in accordance with applicable Federal or
state withholding requirements. No Shares will be issued pursuant to the Option
unless and until such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares then may be traded.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of the Optionee: (a) cash;
(b) check; or (c) such other consideration or in such other manner as may be
determined by the Committee or the Board, which other method, in the discretion
of the Committee or the Board may include, without limitation, payment of the
exercise price in whole or in part (i) with Shares held by the Optionee for at
least six months, (ii) by a promissory note payable to the order of the Company
in a form acceptable to the Committee, or (iii) by the Company retaining from
the Shares to be delivered upon exercise of the Option that number of Shares
having a Fair Market Value on the date of exercise equal to the option price for
the number of Shares with respect to which the Optionee exercises the Option or
by any other form of cashless exercise procedure approved by the Committee or
the Board.
6. TERMINATION OF OPTION. Any and all unvested or unexercised portion of
the Option shall terminate and become null and void at the time of the earliest
to occur of the following:
a. five (5) business days after the date the Optionee's
employment with the Company is terminated for Cause, pursuant to Section 8.a. of
the Employment Agreement;
b. ninety (90) days after the date the Optionee's employment with
the Company is terminated (i) by the Company without Cause, pursuant to Section
8.b. of the Employment Agreement, or (ii) as a result of the death or the total
and permanent disability of the Optionee, pursuant to Section 8.d. of the
Employment Agreement; or
c. thirty (30) days after the date the Optionee terminates his
employment with the Company, pursuant to Section 8.c. of the Employment
Agreement.
Also, the Committee or the Board, in its sole discretion may by giving
written notice (the "cancellation notice" cancel, effective upon the date of the
consummation of any corporation transaction described in Section 8(a) of this
Agreement or the consummation of any reorganization, merger, consolidation or
other transaction in which the Company does not survive, any Option that
2
<PAGE>
remains unexercised on such date. Such cancellation notice shall be given thirty
(30) days prior to the proposed date of such cancellation and may be given
either before or after approval of such corporate transaction.
7. TRANSFERABILITY. The Option is not transferable other than by will or
by the laws of descent and distribution, and during the lifetime of the Optionee
the Option shall be exercisable only by the Optionee or the Optionee's legal
representative. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
8. CHANGE IN CONTROL. This Option shall become immediately fully
exercisable in the event of a "Change in Control" or the event that the
Committee or the Board exercised its discretion to provide a cancellation notice
with respect to the Option pursuant to Section 6 hereof. For this purpose, the
term "Change in Control" shall mean:
a. Approval by the shareholders of the Company of (i) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or (ii) a liquidation or dissolution of the Company or (iii)
the sale of all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned); or
b. Individuals who, as of the date hereof, constitute the board (as of
the date hereof the "Incumbent Board") cease for any reason to constitute a
majority of the Board, provided that (i) any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Securities Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board, and (ii) any person becoming a director subsequent to the date hereof who
is nominated by AP-AGC, LLC, a shareholder of the Company, and who replaces a
member of the Incumbent Board nominated by AP-AGC, LLC, shall be for purposes of
this Agreement considered as though such persons were a member of the Incumbent
Board; or
c. The acquisition (other than from the Company) by any person, entity
or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, (excluding, for this purpose, AP-AGC, LLC or the Company or its
subsidiaries, or any employee benefit plan of the Company or its subsidiaries
which acquires beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of 30% or more of either the then
outstanding
3
<PAGE>
Common Stock or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election of directors.
9. No Right to Continued Employment. Neither the Option nor this Agreement shall
confer upon the Optionee any right to continued employment or service with the
Company.
10. Law Governing. This Agreement shall be governed in accordance with and
governed by the internal laws of the State of Delaware.
11. Notices Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company's Secretary at 2601 S. Bayshore Drive, Miami,
Florida 33133, or if the Company should move its principal office, to such
principal office, and, in the case of the Optionee, to the Optionee's last
permanent address as shown on the Company's records, subject to the right of
either party to designate some other address at any time hereafter in a notice
satisfying the requirements of this Section.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
WITNESSES: COMPANY:
ATLANTIC GULF COMMUNITIES CORPORATION
- ----------------------------- By:
Print: ------------------------------------
----------------------- J. Larry Rutherford,
Chairman of the Board, President
- ----------------------------- and Chief Executive Officer
Print:
-----------------------
EMPLOYEE:
- ----------------------------- ------------------------------
Print: THOMAS W. JEFFREY
-----------------------
- -----------------------------
Print:
-----------------------
4
<PAGE>
ATLANTIC GULF COMMUNITIES CORPORATION
NEW STOCK OPTION PLAN AND AGREEMENT
FOR
THOMAS W. JEFFREY
AGREEMENT
---------
1. GRANT OF OPTION. Atlantic Gulf Communities Corporation, a Delaware
corporation (the "Company") hereby grants, as of November 17, 1997, to Thomas W.
Jeffrey (the "Optionee") an option (the "Option") to purchase up to Two Hundred
Thousand (200,000) shares of the Company's Common Stock, $.10 par value per
share (the "Shares"), at an exercise price per share equal to the Option Price.
The Option shall be subject to the terms and conditions set forth herein. The
Option is a nonqualified stock option, and not an Incentive Stock Option.
2. STOCK OPTION PLAN. This Agreement shall also serve as the plan under which
the Option is granted, pursuant to the regulations promulgated under Section 162
of the Internal Revenue Code. The maximum number of shares that may be subject
to acquisition under the Option may not exceed Two Hundred Thousand (200,000)
shares.
3. DEFINITIONS. As used herein, the following terms shall have the meaning
indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall have the meaning set forth for such term in Section
8.a. of the Employment Agreement.
(c) "Committee" shall mean a committee appointed by the Board (the
"Committee") which shall be composed of two or more Directors all of whom shall
be Outside Directors. The membership of the Committee shall be constituted so as
to comply at all times with the applicable requirements of Rule 16b-3
promulgated under the Securities Exchange Act and Section 162(m) of the Internal
Revenue Code. The Committee shall serve at the pleasure of the Board and shall
have the powers designated herein and such other powers as the Board may from
time to time confer upon it.
(d) "Common Stock" shall mean the Company's Common Stock, par value
$.10 per share.
(e) "Director" shall mean a member of the Board.
(f) "Employment Agreement" shall mean that certain Employment Agreement
entered into by and between the Company and the Optionee, of even date herewith.
(g) "Fair Market Value" of a Share on any date of reference shall mean
the "Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding such
<PAGE>
date, unless the Committee in its sole discretion shall determine otherwise in a
fair and uniform manner. For the purpose of determining Fair Market Value, the
"Closing Price" of the Common Stock on any business day shall be the last
reported sale price of the Common Stock on the National Association of
Securities Dealers' National Market System, on an national securities exchange,
or, if no such sales price is reported, the mean between the closing high bid
and low asked quotations for such day of Common Stock on such system, as
reported in any newspaper of general circulation. If no quotation is made for
the applicable day, the Fair Market Value shall be determined in the manner set
forth in the preceding sentence using quotations for the next preceding day for
which there were quotations, provided that such quotations shall have been made
within the ten (10) "Trading" days preceding the applicable day. Notwithstanding
the foregoing, if no such information is available, or if otherwise determined
necessary by the Committee, the Fair Market Value shall be determined in good
faith by the Committee or the Board in a fair and uniform manner.
(h) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(i) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(j) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(k) "Option" (when capitalized) shall mean any option granted under
this Agreement.
(l) "Option Price" shall mean the Fair Market Value of a Share on the
Shareholder Approval Date.
(m) "Outside Director" shall mean a member of the Board who qualifies
as an "outside director" under Section 162(m) of the Internal Revenue Code and
the regulations thereunder and as a "Non-Employee Director" under Rule 16b-3
promulgated under the Securities Exchange Act.
(n) "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(o) "Share" shall mean a share of Common Stock.
(p) "Shareholder Approval Date" shall mean the date on which this Stock
Option Plan and Agreement is approved by a majority vote of the shareholders of
the Company, in satisfaction of Section 162(m) of the internal Revenue Code.
4. Exercise Schedule.
------------------
(a) Except as otherwise provided in Sections 7 or 10 of this Agreement,
the Option shall be exercisable in whole or in part, and cumulatively, according
to the following schedule:
2
<PAGE>
Number of Shares That
Exercisability Date Become Available for Purchase
------------------- -----------------------------
Shareholder Approval Date 66,667
June 30, 1998 66,667
June 30, 1999 66,666
(b) Notwithstanding anything to the contrary contained herein, the
Optionee may not exercise any portion of the Option at any time prior to the
date on which this Stock Option Plan and Agreement is approved by a majority
vote of the shareholders of the Company, in satisfaction of Section 162(m) of
the Internal Revenue Code. In the event the shareholders of the Company do not
approve this Stock Option Plan and Agreement, in satisfaction of Section 162(m)
of the Internal Revenue Code, prior to September 30, 1998, any portion of the
Option granted to the Optionee hereunder shall be deemed null and void ab
initio, whether or not the Optionee terminates his employment with the Company.
(c) The Option shall terminate on, and in no event shall the Option be
exercisable after, November 16, 2004.
5. METHOD OF EXERCISE. This Option shall be exercisable in whole or in part in
accordance with the exercise schedule set forth in Section 4 hereof by written
notice which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such Shares as may be required by the Company. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The written notice shall be accompanied by payment
of the exercise price. This Option shall be deemed to be exercised after both
(a) receipt by the Company of such written notice accompanied by the exercise
price and (b) arrangements that are satisfactory to the Committee in its sole
discretion have been made for Optionee's payment to the Company of the amount
that is necessary to be withheld in accordance with applicable Federal or state
withholding requirements. No Shares will be issued pursuant to the Option unless
and until such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares then may be traded.
6. METHOD OF PAYMENT. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of the Optionee: (a) cash;
(b) check; or (c) such other consideration or in such other manner as may be
determined by the Committee or the Board, which other method, in the discretion
of the Committee or the Board may include, without limitation, payment of the
exercise price in whole or in part (i) with Shares held by the Optionee for at
least six (6) months, (ii) by a promissory note payable to the order of the
Company in a form acceptable to the Committee, or (iii) by the Company retaining
from the Shares to be delivered upon exercise of the Option that number of
Shares having a Fair Market Value on the date of exercise equal to the option
price for the number of Shares with respect to which the Optionee exercises the
Option or by any other form of cashless exercise procedure approved by the
Committee or the Board.
3
<PAGE>
7. TERMINATION OF OPTION. Any and all unvested or unexercised portion of the
Option shall terminate and become null and void at the time of the earliest to
occur of the following:
(a) five (5) business days after the date the Optionee's employment
with the Company is terminated for Cause, pursuant to Section 8.a. of the
Employment Agreement;
(b) ninety (90) days after the date the Optionee's employment with the
Company is terminated (i) by the Company without Cause, pursuant to Section 8.b.
of the Employment Agreement, or (ii) as a result of the death or the total and
permanent disability of the Optionee, pursuant to Section 8.d. of the Employment
Agreement; or
(c) thirty (30) days after the date the Optionee terminates his
employment with the Company, pursuant to Section 8.c. of the Employment
Agreement.
Also, the Committee or the Board, in its sole discretion may by giving
written notice (the "cancellation notice") cancel, effective upon the date of
the consummation of any corporate transaction described in Section 10(a) of this
Agreement or the consummation of any reorganization, merger, consolidation or
other transaction in which the Company does not survive, any Option that remains
unexercised on such date. Such cancellation notice shall be given thirty (30)
days prior to the proposed date of such cancellation and may be given either
before or after approval of such corporate transaction.
8. TRANSFERABILITY.
----------------
(a) The Option is not transferable other than by will or by the laws of
descent and distribution, and during the lifetime of the Optionee the Option
shall be exercisable only by the Optionee or the Optionee's legal
representative. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
(b) Unless the prior written consent of the Committee or the Board is
obtained and the transaction does not violate the requirements of Rule 16b-3
promulgated under the Securities Exchange Act, no Shares acquired pursuant to
the exercise of an Option may be sold, assigned, pledged or otherwise
transferred prior to the expiration of the six-month period following the date
on which the Option was granted.
9. NO RIGHTS OF STOCKHOLDERS. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of any portion of the Option prior to
the date of exercise of the Option.
10. CHANGE IN CONTROL. This Option shall become immediately fully exercisable in
the event of a "Change in Control" or in the event that the Committee or the
Board exercises its discretion to provide a cancellation notice with respect to
the Option pursuant to Section 7 hereof. For this purpose, the term "Change in
Control" shall mean:
4
<PAGE>
(a) Approval by the shareholders of the Company of (i) a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or (ii) a liquidation or dissolution of the Company or (iii)
the sale of all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned); or
(b) Individuals who, as of the date hereof, constitute the Board (as of
the date hereof the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that (i) any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a- 11 of Regulation
14A promulgated under the Securities Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board, and (ii) any person becoming a director subsequent to the date hereof who
is nominated by AP-AGC, LLC, a shareholder of the Company, and who replaces a
member of the Incumbent Board nominated by AP-AGC, LLC, shall be for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or
(c) The acquisition (other than from the Company) by any person, entity
or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, (excluding, for this purpose, AP-AGC, LLC or the Company or its
subsidiaries, or any employee benefit plan of the Company or its subsidiaries
which acquires beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of 30% or more of either the then
outstanding Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the election of
directors.
11. ADJUSTMENT OF SHARES.
---------------------
(a) If at any time while unexercised Options are outstanding, there
shall be any increase or decrease in the number of issued and outstanding Shares
through the declaration of a stock dividend or through any recapitalization
resulting in a stock split-up, combination or exchange of Shares, then and in
such event, appropriate adjustment shall be made in the number of Shares and the
exercise price per Share thereof subject to any outstanding Option, so that the
same percentage of the Company's issued and outstanding Shares shall remain
subject to purchase at the same aggregate exercise price.
(b) The Committee or the Board may change the terms of Options
outstanding under this Agreement, with respect to the option price or the number
of Shares subject to the Options, or both,
5
<PAGE>
when, in the Committee's or Board's sole discretion, such adjustments become
appropriate so as to preserve but not increase benefits under this Agreement.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made to, the number of or exercise price for Shares then subject to
outstanding Options granted under this Agreement.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under this Agreement shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
12. ISSUANCE OF SHARES.
-------------------
(a) The Company shall not be obligated to issue any Shares unless it is
advised by counsel of its selection that it may do so without violation of the
applicable Federal and State laws pertaining to the issuance of securities, and
may require any stock so issued to bear a legend, may give its transfer agent
instructions, and may take such other steps, as in its judgment are reasonably
required to prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon exercise of
any Option, the Committee or the Board may require such agreements or
undertakings as the Committee or the Board may deem necessary or advisable to
facilitate compliance with any applicable law or regulation including, but not
limited to, the following:
(i) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he is acquiring
the Shares to be issued to him for investment and not with a view
to, or for sale in connection with, the distribution of any such
Shares; and
(ii a representation, warranty and/or agreement to be
bound by any legends endorsed upon the certificate(s) for such
Shares that are, in the opinion of the Committee or the Board,
necessary or appropriate to facilitate compliance with the
provisions of any securities laws deemed by the Committee or the
Board to be applicable to the issuance and transfer of such Shares.
6
<PAGE>
13. ADMINISTRATION.
--------------
(a) This Agreement shall be administered by the Committee or the Board.
(b) The Committee or the Board, from time to time, may adopt rules and
regulations for carrying out the purposes of this Agreement. The determinations
by the Committee or the Board, and the interpretation and construction of any
provision of this Agreement by the Committee or the Board, shall be final and
conclusive.
14. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Option nor this Agreement
shall confer upon the Optionee any right to continued employment or service with
the Company.
15. LAW GOVERNING. This Agreement shall be governed in accordance with and
governed by the internal laws of the State of Delaware.
16. INTERPRETATION. The Optionee accepts the Option subject to all the terms and
provisions of this Agreement. The undersigned Optionee hereby accepts as
binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the this Agreement.
17. NOTICES. Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company's Secretary at 2601 S. Bayshore Drive, Miami,
Florida 33133, or if the Company should move its principal office, to such
principal office, and, in the case of the Optionee, to the Optionee's last
permanent address as shown on the Company's records, subject to the right of
either party to designate some other address at any time hereafter in a notice
satisfying the requirements of this Section.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the 17th day of November, 1997.
COMPANY:
ATLANTIC GULF COMMUNITIES
CORPORATION
By:
---------------------------------------
Name: J. Larry Rutherford
Title: President, Chairman of the Board
and Chief Executive Officer
Dated: OPTIONEE:
By:
---------------------------------------
